Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

WELSH SHIPPING AGENCY BILL [Lords] (By Order)

Consideration, as amended, deferred till Tuesday next.

EDINBURGH CORPORATION ORDER CONFIRMATION BILL

Read a Second time; to be considered Tomorrow.

Oral Answers to Questions — COMMONWEALTH RELATIONS

Immigration to United Kingdom

Mr. William Hamilton: asked the Secretary of State for Commonwealth Relations what progress has been made in the discussions with other Commonwealth Governments on the problem of immigration into this country; and whether he will make a statement.

The Secretary of State for Commonwealth Relations (Mr. Arthur Bottomley): I said in my reply to my hon. Friend the Member for Leyton (Mr. Sorensen) on 24th November that I had nothing to add to the reply I gave to the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) on 17th November. This is still the position.

Mr. Hamilton: I am not too well acquainted with the contents of that Answer. Can my right hon. Friend say whether negotiations are still continuing with the Commonwealth Governments and whether at this stage he can say what the response has been, particularly from the Indian, Pakistan and West Indian Governments, to my right hon. Friend's proposals.

Mr. Bottomley: Discussions are still continuing, and at this stage I have nothing further to add.

Mr. Geoffrey Lloyd: Does the right hon. Gentleman now appreciate the advantages of the Commonwealth Immigration Act which is protecting the country from an undue flood of immigration while the right hon. Gentleman pursues his negotiations?

Mr. Bottomley: As I have said, the negotiations are still continuing and until they are finalised there is nothing further to add.

Fugitive Offenders Act, 1881

Mr. Dudley Smith: asked the Secretary of State for Commonwealth Relations what proposals he has for the alteration and improvement of the Fugitive Offenders Act, 1881.

The Minister of State, Commonwealth Relations Office (Mr. Cledwyn Hughes): Precise proposals were put to Commonwealth Governments several months ago, but we have not yet received the comments of all the Governments. This is, of course, an extremely complex matter. Meanwhile, I should prefer to treat as confidential the various proposals which we are in process of discussing with the Commonwealth.

Mr. Smith: Does not the hon. Gentleman remember that when I taxed my own side on the subject some 18 months ago the then Opposition indicated that if they were in power they would treat this with the utmost urgency and would amend the Act? Does he think that this should now go ahead despite the confidential nature of the discussions, and would he get in touch with the Commonwealth Governments concerned so that we can have a Bill before us in this Session?

Mr. Hughes: We are anxious to complete a review of the Act as soon as possible, and other Commonwealth Governments have been urged to let us have their views at an early date. I hope that it will prove possible for us and the rest of the Commonwealth Governments to move forward in step with each other. I think that that would be the view of hon. and right hon. Members.

Exports to the United Kingdom (Surcharge)

Mr. Goodhart: asked the Secretary of State for Commonwealth Relations (1) what decline in imports from Commonwealth countries he expects as a result of the imposition of import surcharges; and
(2) what studies he is making of the effect of the import surcharges on the economies of Commonwealth countries.

Mr. Cledwyn Hughes: The purpose of the charge is, of course, to reduce imports, but it leaves consumer choice free. Its effect on any particular category of imports and particular supplying countries will depend on the decisions of importers and consumers. The Government will keep a careful watch on the effect.

Mr. Goodhart: Is not the Minister rather ashamed of having to give that reply when very little consideration has been given to the effect on the Commonwealth'? Have any talks been carried on between the Minister and the Minister for Overseas Development about special aid to offset this severe blow to Commonwealth trade?

Mr. Hughes: Other Commonwealth Governments have already in some cases indicated their confidential views on how import charges will affect them. They will probably give more detailed accounts when they have had time to consider the matter more carefully. I cannot go further than that at the moment.

Mr. Turton: Will the hon. Gentleman explain why it was that these confidential communications were not asked for from these Governments before the charge was put on when it appears from paragraph 11 of the White Paper that the United States Government were fully consulted?

Mr. Hughes: No Government was consulted before the announcement was made about the surcharges. All Governments were informed more or less about the same time.

Mr. Bence: Could my hon. Friend tell us for how much longer exporters in the Commonwealth countries would be prepared to export to us if we were not in a position to pay for their exports?

Mr. Tilney: Is it not very surprising that, despite agreements always to consult with the Commonwealth, they were not consulted?

Mr. Hughes: The hon. Member should know that this was an extraordinary situation brought about by the actions of his Government.

Mr. Ennals: Will my hon. Friend confirm that during the 13 years of Conservative rule there was a steady decline in Commonwealth trade?

Sir F. Bennett asked: the Secretary of State for Commonwealth Relations what advance notification of the decision to impose a 15 per cent. surcharge on imports was given to the Commonwealth.

Mr. Cledwyn Hughes: I have nothing to add to the reply of my right hon. Friend the Commonwealth Secretary to the right hon. Member for Streatham (Mr. Sandys) on 17th November.

Sir F. Bennett: Can the hon. Gentleman now clarify once and for all that no advance notification whatever was given to the Commonwealth, but was given to the United States of America? Can we have a straight answer to that, as it is a question which we have found it difficult to get answered?

Mr. Hughes: All Governments were notified. There was no consultation. I can assure the House that any difference in timing of the messages to Commonwealth and other Governments was not significant.

Mr. Shinwell: Will my hon. Friend take the opportunity to congratulate the hon. Member for Torquay (Sir F. Bennett) on the honour which he has just had bestowed upon him for political services? At the same time, will he reject the patronising attitude which we are now witnessing day by day from hon. Members opposite and in plain language reject it? If he does not have a sufficient supply of plain language, let him come to me and I will lend it to him.

Mr. Hughes: I have a sufficient supply of plain language in both English and Welsh, but as this is my first appearance at the Dispatch Box, my right hon. Friend will excuse if I do not use it today.

Oral Answers to Questions — RHODESIA

Economic Aid

Mr. Wingfield Digby: asked the Secretary of State for Commonwealth Relations what has been the total financial assistance granted by Her Majesty's Government for education in Rhodesia since self government.

Mr. Cledwyn Hughes: I am replying to the two Questions put down by the hon. Gentleman the Member for Dorset, West (Mr. Wingfield Digby) as they were put down before the division of responsibilities between the Commonwealth Relations Office and Ministry of Overseas Development was settled. It may be helpful to the House if I mention that in future such questions, relating essentially to British economic aid, will be answered by my right hon. Friend the Minister of Overseas Development.
Southern Rhodesia sought no financial assistance from the British Government for many years after 1923. During the Federal decade education in Southern Rhodesia benefited from the allocations of £2,875,000 of Colonial Development and Welfare funds to the University College in Salisbury which was a Federal responsibility. In 1962 a loan of £355,000 was made to the Southern Rhodesian Government for African education and this year a grant of £1,850,000 has been announced for the University College and Teaching Hospital.

Mr. Digby: Have the Government in mind any further assistance for education in Rhodesia, particularly for secondary education, and, if they have, will there be any political conditions attached to such help?

Mr. Hughes: Future assistance is a matter for consideration between the two Governments. Of the sum I mentioned towards the teaching hospital, £280,000 has been paid and the balance will be paid as instalments fall due over the next two years. As to political considerations, aid to Southern Rhodesia will continue provided no unconstitutional action is taken.

Mr. R. Carr: While being grateful to the hon. Gentleman for the first part of the Answer clarifying the procedure in answering Questions, may I ask whether he could say to what extent the prime

responsibility for deciding whether or not to give aid to a country will rest with his right hon. Friend the Secretary of State for Commonwealth Relations or whether that responsibility has been completely passed to the Ministry for Overseas Development?

Mr. Hughes: I would refer the right hon. Gentleman to the very full statement made on this by my right hon. Friend the Minister for Overseas Development.

Mr. R. Carr: Because that was not very clear, I was asking a supplementary question having regard to the way Questions have been transferred. Such Questions, and this one which was not transferred, were all put down since the statement was made, and it seemed to be not very clear.

Mr. Wingfield Digby: asked the Secretary of State for Commonwealth Relations what has been the total financial assistance granted by Her Majesty's Government for African housing in Rhodesia since self-government.

Mr. Cledwyn Hughes: In 1956, a Colonial Development Corporation loan of £1 million, and, in 1962, a Colonial Development and Welfare loan of £3·5 million for general development, of which over half was devoted to African housing.

Mr. Digby: Is the hon. Gentleman aware of the work which is being done for African housing, particularly for home ownership, and will he take an early opportunity of going there to see it for himself?

Mr. Hughes: We are aware of the work which is being done and we appreciate its importance.

Constitution

Mr. Dempsey: asked the Secretary of State for Commonwealth Relations what progress has been made in solving the constitutional questions of Rhodesia.

Mr. Bottomley: We are still seeking, as the first step, to arrange for constructive talks with the Prime Minister of Southern Rhodesia.

Mr. Dempsey: Will my right hon. Friend proceed in this matter a little more speedily because of the growing


apprehension in Rhodesia about the uncertain future, and will he see to it that the spokesmen for Rhodesians in general, in spite of restrictions imposed upon them, will be allowed fully to ventilate their attitude towards the problem?

Mr. Bottomley: At the moment, we are hopeful that the Prime Minister of Southern Rhodesia will accept the invitation of my right hon. Friend the Prime Minister to come to this country.

Prime Minister (Conversations)

Mr. Goodhew: asked the Secretary of State for Commonwealth Relations what conversations he has had with the Prime Minister of Rhodesia.

Mr. Bottomley: None, Sir.

Mr. Goodhew: Is the right hon. Gentleman aware that there is great anxiety in this country that some sort of accommodation should be reached with the Government of Southern Rhodesia, or Rhodesia as it is now called, and is he further aware that, he having been so outspoken in his statements to the Rhodesian Government, many people in this country feel that he should now be equally outspoken to the African nationalist politicians in that country? Will he point out to them the necessity to fight constitutionally if they wish to be taken as responsible politicians rather than rely on intimidation and violence? [HON. MEMBERS: "What Constitution?"] The 1961 Constitution.

Mr. Bottomley: It is precisely for that reason that we should like talks to get going as soon as possible, so that we can bring about a situation in Rhodesia where peace and security will prevail.

Mr. Goodhew: It is all very well for the right hon. Gentleman to say that he wishes to speak to the Prime Minister, but this will not do on its own. He has had some pretty rough things to say to the Europeans. Will he now be equally outspoken to the African nationalists, making clear that there is a Constitution on which they could fight and that it would be much more effective if they were to do this instead of relying on intimidation and violence?

Mr. Bottomley: Perhaps the hon. Gentleman will do me the courtesy of reading the speech I made in Zambia in

which I paid tribute to the part which Rhodesians of European descent had played in helping to build up the country and trying to provide a constitution. Since then, there has been a change in the Government, which threatened unilateral action. Until that is out of the way, it will be very difficult to get the Africans to co-operate as we hope they will.

Talks

Mr. Sandys: asked the Secretary of State for Commonwealth Relations what arrangement has now been made for the Prime Minister of Rhodesia to visit London for talks with the British Government, or for the Secretary of State to visit Salisbury for talks there.

Mr. Bottomley: I have nothing to add to the reply which I have just given to the hon. Member for Coatbridge and Airdrie (Mr. Dempsey).

Mr. Sandys: As I understand from the Prime Minister that correspondence is proceeding between the two Governments, may I take it that a statement will be made as soon as possible?

Mr. Bottomley: As the right hon. Gentleman has said, correspondence is taking place between both parties and as soon as we are able to make a statement, it will be made.

Oral Answers to Questions — CEYLON

Budget Measures

Mr. van Straubenzee: asked the Secretary of State for Commonwealth Relations (1) what representations he has made to the Government of Ceylon about the imposition of a special export tax of 10 cents per pound on all teas shipped from Ceylon for sale in the London auctions, on a special wealth tax of 10 per cent, on the profits of all sterling companies, and the acreage tax of Rs.300 per acre for high grown estates in lieu of the ad valorem duty;
(2) what representations he has made to the Government of Ceylon on that Government's new exchange control regulations prohibiting the payment of dividends to sterling companies for at least 12 months from 31st July, 1964.

Mr. Bottomley: I have made representations to the Ceylon Finance Minister about all those measures in the Ceylon Budget which have an adverse effect on British interests and individuals, including those mentioned by the hon. Member.

Mr. van Straubenzee: I am grateful for the representations mentioned by the right hon. Gentleman, but is he aware of the considerable hardship being caused to individuals in this country particularly by the operation of the exchange control regulations mentioned in Question No. 6? Would he feel it proper to represent not only this hardship but also the very discouraging effect of these budgetary measures upon further investment in Ceylon?

Mr. Bottomley: The Ceylon Government have undertaken to consider these hardship cases. As regards the second part of the hon. Gentleman's supplementary question, I think that we ought to wait and see what happens as a result of the return of the Ceylon Finance Minister.

Mr. Dodds-Parker: Is the right hon. Gentleman aware of the growing public unwillingness to provide aid to these Governments which seem bent on destroying existing productive industry, and will he bring this to the attention of the Ceylon Government?

Mr. Bottomley: I have nothing to add to what I have already said on this matter.

Economic Aid

Mr. Fisher: asked the Secretary of State for Commonwealth Relations whether he will withhold the grant of further Government economic aid to the Ceylon Government as long as that Government maintain their policy of squeezing out British-owned businesses of all kinds in Ceylon.

Mr. Turton: asked the Secretary of State for Commonwealth Relations whether he will make a statement regarding British aid to Ceylon, following his discussions with Ceylon's Minister of Finance during his recent visit to London.

Mr. Bottomley: As my hon. Friend the Minister of State has explained,

Questions essentially dealing with our economic aid are for my right hon. Friend the Minister of Overseas Development.
The Government of Ceylon have assured us that it is not their policy to squeeze out British-owned businesses and that the recent budget measures were intended purely to safeguard Ceylon foreign exchange reserves.
The only governmental aid which we are at present providing to Ceylon is a fairly small amount of technical assistance, the withholding of which would not benefit British interests.
I had no discussion of aid with the Ceylon Finance Minister.

Mr. Fisher: I am very glad to hear that the right hon. Gentleman did not have any discussion on economic aid. In view of the Ceylon Government's attacks upon the freedom of the Press, upon foreign banks, and especially upon all forms of British interests in Ceylon, does not the right hon. Gentleman agree that it would have been intolerable to ask the British taxpayer to assist the financing of policies of this kind, and would it not be better to suspend economic aid until these policies are reversed?

Mr. Bottomley: The Ceylon Finance Minister made no request for aid.

Mr. Turton: Could the right hon. Gentleman explain his Department's division of responsibility, as I have two Questions down, one on Zambia and one on Ceylon, and the one on Zambia was transferred whereas the one on Ceylon has been kept? Does not his reply mean that the right hon. Gentleman does not accept responsibility for aid to Ceylon?

Mr. Bottomley: As I have already said, where the question is essentially one on economic aid for a Commonwealth country, it is the responsibility of the Minister for Overseas Development.

Mr. Fisher: It is not clear to the House, and it is not clear particularly to hon. Members who are putting Questions, why the right hon. Gentleman accepts a Question on aid to Ceylon but transfers to his right hon. Friend an almost identical Question on aid to


Zambia. What precisely are the responsibilities of the two Departments of State?

Mr. Bottomley: I made it quite clear. I think that this will adjust itself as it goes along. For obvious reasons, many of these Questions were put down at an earlier date, and it was then clearly my responsibility. Where the responsibility has now been transferred to my right hon. Friend the Minister for Overseas Development, Questions will be answered accordingly.

Mr. Fisher: They were put down on the same day.

Finance Minister (Talks)

Mr. Tilney: asked the Secretary of State for Commonwealth Relations whether, in his talks with the Ceylon Government's Finance Minister, he discussed the future of the tea industry and the large British investment in Ceylon.

Mr. Bottomley: I made it clear to Dr. Perera that, if they were given the chance, British enterprise and investment could continue to make an important contribution to the economy of Ceylon, including the important export-earning tea industry.

Mr. Tilney: Will the right hon. Gentleman point out to the Government of Ceylon that the high taxation, particularly the new wealth tax which is retrospective, is having a bad effect on the maintenance of tea gardens and will be likely to affect the export of tea in future?

Mr. Bottomley: This matter was discussed in my talks with the Finance Minister.

Mr. Tilney: asked the Secretary of State for Commonwealth Relations whether, in his talks with the Ceylon Government's Finance Minister, he discussed the unfavourable balance of trade which Great Britain has with Ceylon.

Mr. Bottomley: No, Sir.

Mr. Tilney: Will the right hon. Gentleman bear in mind that the balance of trade between this country and Ceylon is greatly in favour of Ceylon and that there are many widows of those who helped to build up the economy of Ceylon who are entirely dependent on dividends they receive from Ceylon?

Mr. Bottomley: The fact that Ceylon's trade with Britain is in her favour makes all the more regrettable the measures recently taken by the Ceylon Government to restrict invisible payments, so large a part of which normally come to Britain.

Mr. Stratton Mills: Is the right hon. Gentleman aware that the Ceylon Government have put pressure on tea companies not to pay dividends out of funds which have accrued and are at present in London?

Mr. Bottomley: That again was a matter we discussed when I met the Finance Minister.

Oral Answers to Questions — CYPRUS

Situation

Mr. Channon: asked the Secretary of State for Commonwealth Relations what progress has been made in recent weeks towards a solution of the Cyprus problem.

Mr. Bottomley: As I told the hon. Member for Haltemprice (Mr. Wall) on 24th November, we await the report of the United Nations mediator.
On 27th November, Señor Galo Plaza gave Ministers an account of the progress of his mediation. He was told that we were prepared to assist him in the promotion of any solution likely to prove acceptable to all the parties concerned. As regards our sovereign bases, it was pointed out that they have never formed part of the Republic of Cyprus and are not involved in the present dispute; and that we could not conceive of a solution which would not provide for British base facilities.

Mr. Channon: The right hon. Gentleman's remarks about sovereign bases will receive general acceptance at least on this side of the House, and we are grateful for them, but can he tell us anything at this stage about what is likely to be the future of the British forces on the island? As I understand it, the mandate for the United Nations force expires on Boxing Day. Is it likely to be renewed, and what does the right hon. Gentleman say about the finance provided by Great Britain, as we have already spent 3½ million dollars on this fruitless attempt so far?

Mr. Bottomley: We hope that the United Nations mandate will be renewed. If it is, we shall accept our obligations as a result.

Mr. Sandys: Is the Minister aware that his statement that the Government intend to retain British bases in Cyprus will be welcomed and that we are all very glad to know that this is one of the commitments which the Government do not intend to abandon?

Mr. Emrys Hughes: I was told yesterday that the Cyprus base had cost this country £200 million under the previous Administration, £20 million a year. Are we to take it that the present Government will carry on the policy of the previous Government?

Mr. Bottomley: At this moment, it is the intention of the Government to have a base in Cyprus.

Oral Answers to Questions — MALTA

Exports to United Kingdom (Surcharge)

Mr. Grant-Ferris: asked the Secretary of State for Commonwealth Relations whether Her Majesty's Government will exempt Malta from the imposition of the 15 per cent, surcharge on imports into this country.

Sir P. Agnew: asked the Secretary of State for Commonwealth Relations if he will augment the sum to be given to Malta in grant-aid by the amount of the cost to the Maltese economy of the surcharge on imports into the United Kingdom.

Mr. Cledwyn Hughes: it is not possible to discriminate in favour of Malta either in the incidence of the temporary import charge or by making any additional financial payments.

Mr. Grant-Ferris: Such an Answer will give no satisfaction either here or in Malta. As the last Government, with the support of the party opposite, did a great deal to start industry going in Malta, is it not the height of folly to cut the ground from under all that, and will the Minister give the House an assurance that Malta will not suffer deleteriously as a result of Government policies?

Mr. Hughes: The Government much regret the necessity to impose the import

surcharge on countries such as Malta with which we have a special relationship, but in the end their interests would have suffered much more if we had allowed our balance of payments to deteriorate further. The prime necessity at this time is to maintain the strength of sterling.

Sir P. Agnew: As Malta receives grant aid, with the assent of hon. Members in all parts of the House, is it not quite inappropriate to take some of it away again in the form of surcharges?

Mr. Hughes: We appreciate the problems of Malta, but I stress once again what my right hon. Friends have already said on several occasions, that these surcharges are temporary in their effect.

Mr. Sandys: Is the hon. Gentleman aware that the financial arrangement with Malta was based as far as possible on an exact calculation of its essential needs? Will he, therefore, consider this matter further?

Mr. Hughes: We are always prepared to consider any constructive suggestion, but I must point out that the great bulk of Malta's foreign earnings derives from invisible exports, that is, goods and services supplies to the British forces.

Mr. Sydney Silverman: Has my hon. Friend made any calculation of what it would cost in the effort to reduce imports if consent were given to each and all of the recommendations from the other side of the House to make exceptions?

Mr. Hughes: No, Sir; we have no such figures.

Oral Answers to Questions — TANZANIA

British Nationals, Arusha (Leasehold Rights)

Sir J. Fletcher-Cooke: asked the Secretary of State for Commonwealth Relations what further information he has received as to the reasons for the recent revocation of leasehold rights of occupancy in the Arusha area of Tanganyika; and what steps Her Majesty's Government are proposing to take to ensure that, where appropriate, British nationals are adequately compensated for the deprivation of their properties.

Mr. Bottomley: No specific reasons have been given, but these rights of occupancy were revoked under longstanding legislation providing for the proper development of land in Tanganyika. As regards the second part of the question, I understand that the Tanzanian Government have appointed a commission to inquire into individual cases. It is, therefore, premature to speak of deprivation of property.

Sir J. Fletcher-Cooke: Has the Secretary of State any information to suggest that the real reason for this action by the Government of Tanzania is that the British subjects involved declined to take out Tanzanian nationality? If he has no such information, will he make inquiries on the point?

Mr. Bottomley: I have no such information. If the hon. Gentleman has evidence to support it, I should be glad to have it.

Mr. Sandys: Will the right hon. Gentleman give an assurance that he will not accept what has gone on in Tanzania as a pattern for the Government's leasehold enfranchisement?

Mr. Bottomley: We have an assurance from the President of Tanzania that he wants to do all he can to help to keep British subjects there, and I think that we ought to rely upon that.

Mr. Goodhart: Is the right hon. Gentleman aware that the harassing of British missionaries in this area has been increased in recent days? Will he ask the High Commissioner to keep an eye on this and protest, if necessary?

Mr. Bottomley: I think that the hon. Gentleman may be referring to one case. In that instance, we called for inquiries, and we are satisfied about the matter.

British Citizens

Mr. Hornby: asked the Secretary of State for Commonwealth Relations what information he has now received as a result of his further investigations into the official allegations made against British subjects in Tanzania; and what further action he has taken.

Mr. Bottomley: The Tanzanian authorities have made no general allegations against British citizens. As regards

individual British citizens who have recently been expelled from Tanzania, I have nothing to add to the reply I gave to the hon. Member for Chigwell (Mr. Biggs-Davison) on 24th November.

Mr. Hornby: Is it not a fact that very grave anxieties were aroused by the events which the right hon. Gentleman reported in his previous Answer? Is it not also a fact that very much assistance in many different ways has been given to Tanzania by British subjects who have gone to work there? Can the right hon. Gentleman ask for an early reply from the President of Tanzania and tell the House what advice he is giving meanwhile to the Minister of Overseas Development about conditions of service in Tanzania at present?

Mr. Bottomley: On the general question I have seen the Tanzanian High Commissioner. He assured me that British interests will be fully protected and British subjects, they hope, will remain to play a part in building up the country. In regard to the question about aid, my right hon. Friend and I are always in consultation about any matter where political influence might be concerned with economic aid.

Oral Answers to Questions — MALAWI

British Subjects (Safety)

Mr. Goodhew: asked the Secretary of State for Commonwealth Relations if he is aware of Dr. Banda's recent refusal to give Her Majesty's High Commissioner in Malawi any guarantee for the safety of Major Moxon, Mr. Cameron and Mr. McAdam, all British subjects; and what action he is taking to ensure their safety.

Mr. Cledwyn Hughes: When the British High Commissioner learnt that Messrs. Cameron and McAdam had been threatened in their homes he immediately called upon Dr. Banda. Police protection had been provided; but in view of the strong feeling in the country following recent political events Dr. Banda felt unable to guarantee their future safety. Major Moxon was not involved at that time. All three men have now left Malawi.

Mr. Goodhew: Is the hon. Gentleman aware that this state of affairs in which the head of a Government cannot guarantee the safety of British subjects is a


matter of great concern to this House? Will he make representations to Dr. Banda to ensure the future safety of British lives and property in his country? Will he also ensure that where people are forced—in spite of that—to leave the country in a hurry, they receive adequate compensation for the property which they leave behind?

Mr. Hughes: Representations have been made by our High Commissioner to Dr. Banda. Dr. Banda has stated that British subjects are very welcome in Malawi provided they do not interfere in Malawi's internal affairs. The question of compensation goes rather far from the original Question.

Oral Answers to Questions — INDIA

Armaments

Mr. George Jeger: asked the Secretary of State for Commonwealth Relations what undertakings and guarantees were given by the Indian Government as to the use of armaments to the value of £13 million promised in the recent agreement; and whether he will make a statement.

Mr. Bottomley: We have not promised armaments to the value of £13 million in any recent agreement. I assume my hon. Friend is thinking of the figure of £13·66 million which has been quoted as the total foreign exchange which the Indian Government may require to complete the reconstruction of the Mazagon Dockyard in Bombay and the construction there of three Leander-class frigates. As my hon. Friend will be aware, the British Government have undertaken to make available a loan of £4·7 million over the next four years to help finance this project.
We recognise that the Indian Navy has a requirement to replace a number of ageing ships in her fleet. No specific undertakings or guarantees have been given by the Indian Government as to the use they will make of these frigates.

Mr. Jeger: Is my right hon. Friend aware that this agreement, the Press report on which is rather obscure, has caused considerable disquiet to India's neighbours, in particular to Pakistan? Will he give an undertaking that all questions of Commonwealth defence in

future should require prior consultation with the neighbouring Commonwealth countries concerned?

Mr. Bottomley: The Pakistan Government are aware of the reasons why this loan was made.

Mr. Goodhew: Is the right hon Gentleman aware that it is a rather strange position in which the Government are now prepared to give arms to a country in the Commonwealth which is not prepared to stand by any Commonwealth defence agreement and yet deny arms to South Africa which is prepared to stand by its agreements? Is lie not also aware that the concern expressed by his hon. Friend the Member for Goole (Mr. George Jeger) is felt very strongly in Pakistan, especially in view of the fact that India is one of the countries—[HON. MEMBERS: "Question."]—I am asking a question—India is a country which has used force for the settlement of international disputes? This is a matter of considerable moment to its neighbours?

Mr. Bottomley: Unlike the party opposite, we shall always put Commonwealth interests first.

Defence Aid

Sir F. Bennett: asked the Secretary of State for Commonwealth Relations what safeguards Her Majesty's Government have sought to obtain to ensure that the defence aid to India stipulated in the Indo-British communiqué of 20th November is not deployed for purposes of internal repression or conflict with her sub-continental neighbours.

Mr. Bottomley: If the hon. Member will refer to the communiqué of 20th November, he will see that no new commitments for the supply of arms and military equipment have been undertaken.

Sir F. Bennett: In regard to the general supply of arms to India at present, under that communiqué and otherwise, and recalling his and his friends' many statements in the past that it is impossible to distinguish to what use weapons are to be put in any particular country, can the right hon. Gentleman say whether in his undertakings for the supply of arms to India


he bears in mind all the feelings of Pakistanis in this matter?

Mr. Bottomley: In supplying arms to Commonwealth countries we do not subject them to any limitation as to their use.

Mr. Biggs-Davison: Is not the defence aid very properly extended by the United Kingdom to India partially vitiated by the absence of that common defence system for the sub-continent which was offered by Field-Marshal Ayub Khan to the late Sri Nehru and, to achieve that, is not the problem of self-determination in Kashmir very relevant? Will Her Majesty's Government, in common with other Commonwealth Governments, do their best in this difficult problem to see whether India and Pakistan can be brought closer together in the interests of the Commonwealth?

Mr. Bottomley: This is a matter where all Commonwealth Governments are willing to help if their services are required. Of course we would all like to see the differences between India and Pakistan over Kashmir ended as soon as possible.

Mr. George Jeger: In considering these matters, will my right hon. Friend give weight to the view that building up arms in that area will not reduce tension between India and Pakistan?

Mr. Bottomley: This is a matter we have very much in mind.

Oral Answers to Questions — NIGERIA

Dr. V. Allen

Mr. Hugh Jenkins: asked the Secretary of State for Commonwealth Relations if he is aware that Dr. V. Allen, a British subject, was sentenced to 12 months' imprisonment with hard labour in Western Nigeria, that the previous charge against Dr. Allen was withdrawn, that he was then re-arrested on a new charge, and that a statement from Dr. Allen was disallowed on the grounds that it had been taken from him by the police by unlawful means; and what action he proposes to take in this regard.

Mr. Cledwyn Hughes: With permission, I will state the facts briefly. Dr. Allen was first arrested in Lagos on 16th June and charged under the Federal

Nigerian Criminal Code with the offence of managing an unlawful society. On 1st July this charge was withdrawn, and Dr. Allen, then on bail, was formally discharged. He was then charged under the Western Nigerian Criminal Code, with three others on three separate counts involving sedition. The hearing, in a Western Nigerian court, lasted until 10th October, and on 10th November all four were found guilty and sentenced to four months imprisonment on each charge, to run consecutively. Dr. Allen has been given light work in the prison printing shop. During the trial the magistrate heard evidence on the admissibility of a statement alleged to have been made by Dr. Allen and ruled that this statement could not be admitted.
The Government are satisfied that Dr. Allen has had a fair trial and that the British High Commissioner's staff in Lagos have, from the beginning, given him the maximum assistance to which he was entitled. The High Commissioner has kept my office fully in touch and will continue to do so. I am satisfied that there is no case at present for any representations to the Nigerian Government on Dr. Allen's behalf.
An appeal has now been filed. As the case is still sub judice I do not think that it would be appropriate to make any further comment.

Oral Answers to Questions — JAMAICA

Foreign Nationals and Commonwealth Citizens (Employment) Act

Sir J. Vaughan-Morgan: asked the Secretary of State for Commonwealth Relations what representations he has made to the Government of Jamaica in regard to the Foreign Nationals and Commonwealth Citizens (Employment) Act.

Mr. Cledwyn Hughes: The Government drew attention to several aspects of the Bill which adversely affected our citizens, and I am glad to say that the Jamaican authorities made a number of amendments to the Bill before it became law.

Sir J. Vaughan-Morgan: Will the right hon. Gentleman make it quite clear to the Government of Jamaica that we entirely accept the right of any country to limit immigration if it so wishes?


Will he also bear in mind that some firms employing British subjects in Jamaica feel that they may have difficulties now in recruiting the necessary technical staff?

Mr. Hughes: I shall certainly bear in mind what the hon. Member has said, but I draw his attention to one amendment to this Jamaican Act, namely, that Commonwealth citizens are exempt from the provisions of the Act if they have been employed in Jamaica for at least nine months in a year since 1954. That should be of some assistance.

Oral Answers to Questions — MALAYSIA

Indonesian Forces (Acts of Aggression)

Mr. Sandys: asked the Secretary of State for Commonwealth Relations what information he has received from the British High Commissioner in Malaysia about recent acts of aggression against Malaya and Sarawak by Indonesian forces; and what requests he has received for further assistance from the Malaysian Government.

Mr. Bottomley: I understand that during the past two months there have been at least seventeen further Indonesian acts of armed aggression against Malaysia.
The British Government continue to support the Malaysian Government to the full in defending Malaysian soil against these attacks. I have received no request for the deployment of additional British forces for this purpose.

Mr. Sandys: Is the right hon. Gentleman aware that his statement that the British Government continue to support Malaysia to the full will be widely welcomed? Is he aware that his assurance that the Government will continue to carry out the policy of maintaining support for Malaysia, taken together with his earlier statement that the British Government will retain their base in Cyprus, taken together with the other statements that the British Government will maintain their commitment to B.O.A.R. and their base in Aden, shows not very much change in their defence policy?

Mr. Bottomley: The right hon. Gentleman ought to know better. The last supplementary question should be

addressed to the Minister of Defence. All I can say about that part of the question which concerns me is that when I was on the other side of the House I expressed the same opinions about Malaysia as I have today.

Mr. Biggs-Davison: Is the United Nations Security Council aware of this threat to international peace and security? If so, has it anything to say or do about it?

Mr. Bottomley: That is a matter for the Foreign Office.

Mr. Emrys Hughes: Would not my right hon. Friend agree with me that there is a case for the £200 million spent in Cyprus during the last 10 years having been better invested in Scotland? Will he convey to the Government that in Scotland we want the £20 million a year, which the Government are to persist on spending in Cyprus, where it will give better service to the country?

Mr. Speaker: I have great difficulty in working Scotland into a Question about Malaya and Sarawak.

Oral Answers to Questions — ELECTRICITY

Nuclear Power Station, Dungeness (Coast Erosion)

Mr. Costain: asked the Minister of Power if he is aware that the possibility of coast erosion at Dungeness affecting the nuclear power station is causing considerable apprehension to local residents; and if he will give an assurance that the nuclear reactor will not be activated until it has been proved that coast erosion will not affect the safety measures which have been built into the nuclear reactor.

The Parliamentary Secretary to the Ministry of Power (Mr. John Morris): I am aware of Press reports which were subsequently denied by the Central Electricity Generating Board. Erosion and accretion on the beach at Dungeness were assessed before the decision to build the station was made, and I am satisfied that it presents no threat to the safe working of the reactors.

Mr. Costain: Is the hon. Gentleman aware that that Answer will give much satisfaction?

Mr. Morris: Thank you.

Oral Answers to Questions — MINISTRY OF POWER

North Sea Bed (Oil and Natural Gas)

Mr. Eldon Griffiths: asked the Minister of Power what is the policy of Her Majesty's Government towards the public ownership of those areas of the North Sea bed now being prospected for oil and natural gas.

Mr. Peyton: asked the Minister of Power what is the policy of Her Majesty's Government towards the terms and conditions of the licences so far issued in relation to the Continental Shelf.

Mr. Geoffrey Lloyd: asked the Minister of Power what decision he has reached on the future of the licences granted on 17th September for prospecting for oil and gas in the North Sea.

The Minister of Power (Mr. Frederick Lee): As these licences have already been issued the Government have concluded that it would not be in the public interest to disturb them.

Mr. Griffiths: Would not the right hon. Gentleman agree that this is one more example of the Labour Party saying one thing during the election campaign and doing another? Will he give the House and these international companies engaged in prospecting for oil in the North Sea an assurance that the threat of nationalising their operations no longer exists?

Mr. Lee: The statement made during the election by my right hon. Friend was provoked by the action of the then Government, an action which I thought to be quite unseemly and untimely, in that they did not leave such an important decision to the incoming Government. So far as the future is concerned, we must wait and see.

Mr. Peyton: I welcome the statement which the right hon. Gentleman has just made and which clears up the uncertainty. Is not the knowledge which he now has available sufficient to convince him that his predecessor was absolutely right in going straight ahead and not wasting valuable time in this important matter?

Mr. Lee: No. I think that I have already replied to that. I do not think

so. It would have been far better had the incoming Government had the right to issue these licences.

Mr. Geoffrey Lloyd: Does the right hon. Gentleman recollect—

Mr. Woodburn: On a point of order. Is it customary to call three hon. Members on the same side of the House in succession to ask supplementary questions?

Mr. Speaker: I think that it will accord with the right hon. Gentleman's not too short recollection that it is usual to offer an opportunity to ask a supplementary question to those hon. Members who have Questions on the Order Paper.

Mr. Geoffrey Lloyd: Does the right hon. Gentleman recollect that his right hon. Friend the Secretary of State for Economic Affairs said in reference to these licences that it was a case of the last Government giving licences to their private enterprise friends? Will the right hon. Gentleman now ask his right hon. Friend to withdraw that statement?

Mr. Lee: I have already said that I thought that the statements made by both my right hon. Friends at that time were entirely justified. It would have been far better had the incoming Government had the right to distribute these licences themselves.

Mr. Woodburn: Would my right hon. Friend agree that this operation was possible only because the previous Government nationalised nearly half the bed of the North Sea?

Mr. Hector Hughes: Does that policy include steps to protect the fertility and breeding of fish in these fishing grounds, which may otherwise be seriously damaged, with great loss to the North Sea fishing industry and to fish consumers?

Mr. Lee: I do not think that that question should be directed to me.

IMMIGRATION

Mr. Shepherd: asked the Prime Minister whether, in view of the reactions caused by the present volume of immigration, he will appoint a committee to report upon the present situation, having special regard to the problems of assimilation, housing, education and employment.

The Prime Minister (Mr. Harold Wilson): No, Sir. We already have the Commonwealth Immigrants Advisory Council, which advises on the integration of Commonwealth immigrants into the community; and the issues involved are, of course, kept in regular review by the responsible Ministers.

Mr. Shepherd: Is it not a fact that a great deal of prejudice surrounds this subject? Would not much of it be dissipated advantageously if a large and objective review of all these considerations were made? Would it not serve the purpose of dispelling much of the prejudice?

The Prime Minister: I think that, whatever differences there are on this matter in the parties and in the country, everyone will agree on the importance of positive action in the areas where this problem is greatest. The hon. Gentleman will be aware that the Council which I have mentioned has already submitted three reports in the time of the previous Government on housing, education and employment for immigrant school leavers.

Mr. Taverne: Has the Prime Minister had any representation from the Home Secretary, or the Law Officers, concerning a proposal put forward by a group of lawyers to set up a citizens council for a rather different purpose—to investigate any alleged cases of discrimination on grounds of race or religion?

The Prime Minister: I have seen reports of this suggestion, but I have not had a report on it from the Home Secretary or the Attorney-General.

Mr. Lipton: In order to lift the problems arising from immigration out of the party dog fight, will the Prime Minister consider setting up a standing committee on which Members on both sides of the House would be represented, working in conjunction with representatives of the Government Departments concerned, which would be a much more effective body than the well-meaning people who are serving on the Commonwealth Immigrants Advisory Council?

The Prime Minister: The urgent thing is to try to take special action in the areas where the problem is greatest. Of course it is not the custom ever to say what committees of Ministers there are examining these subjects, but I said that

this matter, with particular reference to the positive side which I have just mentioned, was under continuous review.

DRINK AND DRIVING (MINISTER'S BROADCAST)

Sir M. Galpern: asked the Prime Minister whether the official television broadcast by the Minister of Transport on Wednesday, 18th November about drink and driving represents the policy. of Her Majesty's Government.

The Prime Minister: Yes, Sir.

Sir M. Galpern: Is my right hon. Friend aware that the pronouncements of the Minister of Transport on his rule of three has caused widespread dismay and created the belief that it is quite all right and safe for motorists to drink, to partake of three small whiskies, or three half pints of beer, or one-third of a bottle of wine and then drive? Will he consider what steps can be taken to counteract this dangerous advice?

The Prime Minister: I have carefully read the statement of my right hon. Friend. He said:
We think, of course, that throughout the festive season those people who have to drive motor cars would be better not to take alcohol when they are going to be in charge of their cars, but if there are people who must do … they really ought not to exceed the minimum quantities suggested by all research bodies as the level beyond which their driving is impaired.

Mr. Strauss: Is the Prime Minister aware that the amount of alcohol suggested in that speech is above that suggested by the British Medical Association as being safe and that anybody found having had that amount of alcohol in many European countries and in many States of America would be liable to prosecution and severe penalties? Will the Prime Minister ask his right hon. Friend to consider this matter, because the impression given may be dangerous and cause drunken driving?

The Prime Minister: Obviously individuals react differently to given quantities of alcohol and I am informed—though I have not tested it for myself—that it depends even more on how long it was since one got any solid food inside one.

SCIENTIFIC DISCOVERIES (NEW INDUSTRIES)

Mr. Stratton Mills: asked the Prime Minister what proposals he has for the establishment of new industries by public enterprise or in partnership with private industry to produce new scientific discoveries.

The Prime Minister: The Government will be keeping this matter under continuous and urgent study, and will inform Parliament of specific proposals as occasion arises.

Mr. Stratton Mills: Does the Prime Minister recognise that those words are from his own party's election manifesto? Is this yet another tip of an iceberg, the iceberg of public ownership? Does the right hon. Gentleman think that this kind of Measure will do anything to encourage confidence in either sterling or Her Majesty's Government?

The Prime Minister: I recognise the words; I wrote them myself. I am sure that if the hon. Gentleman considers this, he will realise that whether these new industries or units are set up in partnership with private industry or in public enterprise, in so far as they will be new productive units which did not exist before, not transferred from private ownership, they will not only give employment to areas which need employment, but will also be good for making a much bigger contribution to our export drive.

Mr. William Hamilton: Is my right hon. Friend aware that there is an establishment in Glenrothes in Fife which is ready for public take-over, namely, a set of piggeries and factories and refrigerator plant?

The Prime Minister: I am not sure that that is an industry dependent on new scientific discoveries.

Mr. Orme: Will the Prime Minister bear in mind that, particularly in the machine tool industry and industries such as that, sections of public ownership would be exceedingly welcome? Is he aware that we are looking forward to his introducing such legislation in the near future?

The Prime Minister: This Question relates not to a take-over of existing firms, but to the creation of new industries, whether under public enterprise or in partnership with private industry, based on new scientific discoveries. As I indicated in my statement last Thursday, my right hon. Friend the Minister of Technology is taking a special interest in the machine tool industry in view of the anxieties, on both sides of the House, about the growing volume of imports of machine tools and the need to improve that industry's export record.

CIVIL SERVANTS AND GOVERNMENT SCIENTISTS (SECURITY)

Sir Richard Glyn: asked the Prime Minister how many civil servants and Government-employed atomic scientists have been moved from their posts in the last 14 years in the interests of national security because they were foreign-born, or because they had relatives living behind the Iron Curtain or because of a combination of both these circumstances.

The Prime Minister: Twelve, Sir.

Sir Richard Glyn: Would the Prime Minister agree that some of these persons have suffered considerable hardship through being removed from their posts under this security rule? Would he further agree that the security rule has now been abandoned by the present Government, and in those circumstances will he. as an act of simple justice, consider how many of these unfortunate people may be restored to their positions in the present circumstances?

The Prime Minister: The hon. Gentleman is quite wrong. There has been no change whatsoever either in the rule or in the application of the rule. Every case is followed on its merits by the responsible authorities, and anyone who, for any reason—even reasons he cannot himself help—cannot be trusted, is not given access to any form of classified information. I am sure that if the hon. Gentleman will study the record over the past years he will find that in recent times some extremely distinguished civil servants of very high rank of foreign birth gave remarkably good service to the previous Government.

ISRAEL (MINISTER'S BROADCAST)

Mr. Maxwell-Hyslop: asked the Prime Minister whether the official broadcast to Israel on 23rd November by the Minister of Housing about the Middle East represents the policy of Her Majesty's Government.

The Prime Minister: My right hon Friend the Minister of Housing and Local Government did not make an official broadcast to Israel on 23rd November. Nor did he propound policy.

Mr. Maxwell-Hyslop: Would not the right hon. Gentleman agree that it is very unfortunate indeed that Members of the Government should take part in broadcasts of this kind, and would he not really find it easier to control his colleagues if he had fewer of them?

The Prime Minister: I do not think that the right hon. Gentleman sitting opposite to me, or his predecessor, found it particularly easy to control some of their colleagues over the last two or three years, but so far as the broadcast is concerned, if the hon. Member is really interested in the broadcast and not the crack, the fact is that my right hon. Friend has been a regular contributor for 14 years on this particular B.B.C. service, which, I think, has been very satisfactory to the B.B.C. and to all concerned. This particular broadcast was in effect a signing-off broadcast, as it is obviously clear that he cannot continue in this series, and I would have thought it appropriate, after all that time, to say goodbye.

Mr. R. A. Butler: If that was not the official view of the Government, may I ask the right hon. Gentleman what is the official Government policy towards Israel?

The Prime Minister: Yes, if the right hon. Gentleman wants to put down any particular Question he can get an Answer, or in the next debate on foreign affairs he could raise this amongst other matters, and I am sure he would get an answer. To be going on with, I shall be very happy to send the right hon. Gentleman a number of statements which were made by the present Government when we were sitting on the other side of the House.

CENTRAL OFFICE OF INFORMATION

Mr. Kershaw: asked the Prime Minister which Minister has responsibility for the Central Office of Information.

The Prime Minister: My right hon. Friend the Chancellor of the Exchequer is responsible for the total Vote, organisation and staffing of the Central Office of Information. Specific information activities carried out on behalf of a Department are the responsibility of the Departmental Minister concerned.

Mr. Kershaw: That is a pretty odd arrangement, is it not? How is the Paymaster-General going to answer Questions if he has not got any Departmental responsibilities? How is he to answer questions about this? How can he do a proper job? Will the Prime Minister come clean about the job the Paymaster-General has? Whom, really, is he watching?

The Prime Minister: If the hon. Member would study what I said on a previous occasion he would find that there is nothing odd about it at all. The Chancellor of the Exchequer is responsible for the Central Office of Information. If the hon. Member sees any difficulty in this arrangement, it all arises from the fact that we have decided not to have a Minister acting as a party P.R.O.

POLARIS BASE, HOLY LOCH

Mr. Marten: asked the Prime Minister whether it is the policy of Her Majesty's Government that the United States Polaris base should remain in Holy Loch; and if he will make a statement.

The Prime Minister: With permission I will answer this Question and Question No. 10 together.
Members of the Royal Corps of Military Police assisted the Buckinghamshire County Police—

Mr. Speaker: Order. I called Question No. 8.

The Prime Minister: The Answer is "Yes, Sir."

Mr. Marten: Would the right hon. Gentleman agree that the maintenance of


this American base in Scotland is a very effective way of making the Alliance strong?

The Prime Minister: Well, it is a very big subject. We have debated it many times, but certainly the position is as I repeatedly stated when I sat on the other side of the House, that this would be kept in its present form unless and until, as a result of any possible changes in nuclear policy within the Alliance, there were a requirement for it as a N.A.T.O. base.

Mr. Rankin: Is my right hon. Friend aware that, even if the necessity for a nuclear base in Britain is accepted—and I do not accept it—in Scotland we regard its situation as being extremely dangerous—[HON. MEMBERS: "Oh."]—in view of the fact that it is far too near the greatest industrial centre in Scotland?

The Prime Minister: When this was debated when the original agreement was signed, my right hon. Friend the then Leader of the Opposition advanced very substantial criticism on the actual siting in that particular part of Scotland. This was very strongly put by a number of us, but it is now in fact there, and I do not think anyone would suggest uprooting it and sending it to a different part of Scotland.

Mr. Biggs-Davison: Does the right hon. Gentleman the Secretary of State for the Colonies agree with the Prime Minister's endorsement of this Polaris base, and, if so, did he change his mind before or after entering the Cabinet?

The Prime Minister: My right hon. Friend always, I think, agrees with me. I should start to get worried if he ever agreed with the hon. Gentleman.

Mr. Bellenger: On a point of order. The order Paper says that Questions to the Prime Minister will begin at 3.15 p.m. Today they started at 3.19. Possibly the Prime Minister might have been able to complete answering the Questions to him if we had started punctually. May I respectfully ask you, Mr. Speaker, if you yourself could help when there is a long string of supplementary questions to the

Minister replying before the Prime Minister, so that the Prime Minister can start punctually?

Mr. Speaker: No. I proposed to call the first of the Prime Minister's Questions at 3.15. It is a matter of misfortune, or not, according to the view taken, that the Question which last occurred before 3.15 was answered together with two other Questions, involving, of necessity, if we were to get a proper balance, a certain number of supplementaries. I regret this distortion, but cannot from the Chair help.

Mr. Gower: May I respectfully ask your guidance, Mr. Speaker, in view of the great anxiety and the great uncertainty caused by the ill-defined nature of some of the financial proposals of the Chancellor of the Exchequer, and in view of certain statements to the Press, as to whether there is to be a statement now, or an Answer to Questions No. 50 and No. 56, which are related to following Questions to the Prime Minister? Is it possible for the Chancellor to make a statement, or to answer the Questions which are of supreme importance?

Mr. Speaker: It is a curious fact that hon. Members whose Questions are not reached are from time to time tempted to raise them in this way. I would not wish to give encouragement to the practice.

Brigadier Clarke: On a point of order, Mr. Speaker. I heard you call Question No. 7, and the Prime Minister said that he would answer Questions 7 and 10 together. If I had not heard him say that I would have postponed my Question No. 10 to him. May I please postpone that Question, because it is a jolly good one?

Mr. Speaker: The proper method of postponing a Question is not by addressing the Chair in this fashion. The hon. and gallant Member, with respect, is not quite right in saying that I called the Prime Minister to answer No. 7. It was No. 8, and the Prime Minister proceeded, in error, to answer something else, and when I gave him the opportunity he got hack to the right one.

Orders of the Day — FINANCE BILL

Further considered in Committee [Progress, 30th November].

[Dr. HORACE KING in the Chair]

Clause 2.—(HYDROCARBON OILS, PETROL SUBSTITUTES AND POWER METHY LATED SPIRITS.)

3.32 p.m.

Mr. Bryant Godman Irvine: I beg to move Amendment No. 8, in page 2, line 36, at the end to insert:
(4) If on an application made for the purpose of this section by the owner of any machinery or equipment used for the purposes of agricultural or horticultural business it appears to the satisfaction of the Commissioners that the applicant has at any time within the period of six months preceding the date of his application (which date shall be not earlier than six months after the coming into force of this section) used any quantity of hydrocarbon oil for operating such machinery and equipment he shall be entitled to obtain from the Commissioners repayment of two-thirteenths of any customs duty or excise duty paid in respect of the oil so used.
The purpose of this Amendment is to enable the agricultural industry—

The Chairman: Order. I must ask hon. Members to be quieter in leaving the Chamber.

Mr. Godman Irvine: The purpose of the Amendment is to see that the agricultural and horticultural industries shall have an opportunity of reclaiming the amount of tax paid through the hydrocarbon oil duty. Knowing the interest which the hon. Gentleman the Member for Gloucester (Mr. Diamond) has in agriculture, I am sure that he will welcome this opportunity of making his position and that of the Government clear, so that the agricultural industry may have no doubt about it. Perhaps I should tell him that in his party's election manifesto there was nothing which would reassure the agricultural industry, as the results of that election would confirm. However, I am sure that he is well aware that the agricultural industry provides one of the most important supports to our balance of payments, and if the industry is turned into a high-cost industry that will have a very unfortunate effect upon the overall financial position of the country.
What is quite clear from the plan which has been put forward for the hydrocarbon oil duty proposal is that it must lead to inflation. I had a Question down, with some of my right hon. and hon friends, for the Minister of Agriculture on 18th November. On that occasion he made it quite clear that there was to be an increased cost to the industry of about £2½ million to agriculture and £250,000 to horticulture. We pressed the Minister to say how he would deal with that sum, and he said quite clearly that it would be dealt with under the Price Review procedure. What does that mean? It means either that there must be an increase in prices which are paid to the producer for agricultural produce, or that the Government are to find increased sums for agricultural subsidies.
I put it to the Minister that the horticultural industry is not included in the Price Review. So very unsatisfactory was the answer on 18th November that I later put two further questions to him on 25th November to find out whether he was going to do anything for horticulture or not. He made it quite clear that there was nothing he or the Government had in mind for horticulture and he went on to say that during the past 13 years the Government had consistently declined to remit increases on petrol used in the horticultural industry. Yet in 1961, as the Chief Secretary will recall, there was an arrangement made so that the horticultural industry should be relieved of the 2d. per gallon duty then proposed.
The other respect in which I would suggest the Minister of Agriculture was wrong was when he said that £250,000 was to be the cost to the horticultural industry. He was, as I suspected, basing his calculation on the overall amount which is produced by the two industries and dividing the ratio for horticulture by the ratio of output produced by each. That is the wrong way to make that calculation. I would submit that there is a much greater amount which the horticultural industry is to be called upon to pay than £250,000.
According to the Ministry of Agriculture's survey of March, 1964, he will see that there are 45,350 tractors of 10 h.p. or under and the vast majority of those, probably 90 per cent., are used in the horticultural industry. The total of tractors over 10 h.p. is 376,000 and of


those the number estimated to use petrol is only 13,000. If those figures are applied to the total sum we expect to be collected by this duty, it will be seen that there are 45,000 tractors of under 10-horsepower most of which are used in horticulture against only 13,000 suitable for agricultural use. I ask the hon. Gentleman to agree that the calculation is incorrect, and that the figure which the horticultural industry will have to meet will be much more than £250,000 and may be well over half of the total of the £2½ million.
Perhaps I might put it another way. If it is only £250,000, the hon. Gentleman is in precisely the position which the Chancellor of the Exchequer was in in 1961. because, by a strange coincidence, £250,000 was the sum which it was estimated the horticultural industry would have to bear in 1961. The Chancellor of the Exchequer then came to the conclusion that that was a significant amount and that something should be done for the industry. The Chief Secretary is in a similar position today, and I therefore ask him to take this plea seriously on behalf of the horticultural and agricultural industries, and to consider the Amendment very seriously.
I also ask the hon. Gentleman not to forget that on 3rd April, 1963, my right hon. Friend the Member for Barnet (Mr. Maudling), who was then the Chancellor of the Exchequer, when discussing the question of industrial light oils, found that there was a principle which he thought should receive some attention so that relief would be given to an industry which found that, by the imposition of these additional charges, it was having something added to which its competitors were not subjected.
My right hon. Friend said on that occasion:
 The duty of 2s. 9d. a gallon on industrial light oils imposes a special additional burden on a number of industries which happen to use oil in the actual manufacture of their products, one which many of their overseas competitors do not have to carry. I accept in principle the claim for some form of duty relief for industrial light oils."—[OFFICIAL REPORT, 3rd April, 1961: Vol. 675, c. 486.]
If that is a principle which could be applied in a wide area in industry, I submit that it is one which should receive the hon. Gentleman's favourable consideration for the two industries which I have been discussing.
How do we propose that this should be done? If the hon. Gentleman looks at the Amendment, he will recognise that in 1928 Mr. Winston Churchill, the then Chancellor of the Exchequer, introduced precisely the same Amendment to relieve the fishing industry. Whether that will commend the Amendment to the hon. Gentleman remains to be seen, but at least it is a respectable precedent, and it is one which has worked well for many years.
The other possibility of marking the oil would, it is estimated, add about 1s. a gallon in cost, and, therefore, it seems that our proposal is much the better way of dealing with the position. The proposal is that the industry should purchase its oil in the same way as everyone else, and it should then submit claims which will be checked by the county agricultural executive committees, and by the Customs, according to the methods adopted by them in their experience for dealing with such matters.
The hon. Gentleman may say that a scheme of this sort was introduced in 1950–51, which was of short duration. If that should be his argument, perhaps I might remind him that it did not have a long enough run to get the difficulties dealt with. If he looks at some of the precedents in other countries, he will be reassured. This principle is working in Finland, France, Denmark, New Zealand, Sweden, and the United States. The three States in which special consideration has been given, by those with whom I have been in consultation, are Indiana, Illinois and Kentucky, where simple forms are filled in and no difficulties arise. The whole thing works to the satisfaction of everyone who has anything to do with it, and I commend the Amendment to the Committee.

3.45 p.m.

Mr. James Scott-Hopkins: I support my hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) in the Amendment which he has moved.
I protest strongly at the absence of the right hon. Gentleman the Minister for Agriculture and his two Joint Parliamentary Secretaries. None of them has seen fit to come and listen to the debate. This is not the first time that this discourtesy


has been shown to the Committee when a matter of great importance to the agricultural industry has been discussed. It happened in connection with tied cottages when the Protection from Eviction Bill was being discussed. I suggest that the Chief Secretary should ask his right hon. Friend to come here as a matter of urgency so that he can listen to something which will have a great effect on the two industries. I register once more my protest at the Minister's absence.
My hon. Friend has estimated that the total cost to be borne by the farming industry as a result of the imposition of this duty is about £2½ million. There is no question of the industry being able to recoup its costs. There is no question of it being able to raise its prices to get a certain amount back. We have been over this subject in the years gone by. In 1961, the same point was made from the other side of the House by me and my hon. Friends when the duty was raised by an even smaller amount than this. It was pointed out that there was no way in which the farmer could recoup the extra impositions put on him and his industry by this kind of budgetary system until the operation of the Price Review which takes place in the months ahead.
The farmer has had to bear the cost of these increased duties himself, and then hope that at a later date he can recoup the money which he has spent during the months between the imposition and the Price Review. This is grossly unfair, and, although it has an inflationary effect, the farmer does not raise the cost of his produce. Hon. Gentlemen opposite cannot point to a single farm product the price of which has been, or is to be, raised because of this duty, even though it considerably increases the costs to the farmer himself and to the industry.
Let us consider the cost which the agricultural industry has to bear. The President of the N.F.U. has calculated that the actions of the right hon. Gentleman and his friends during the past 40 to 50 days have added about £23 million to the costs of the industry, and this proposal is just a further addition to those costs. I presume that the Chief Secretary will say that this will be taken into account in the Annual Price Review in March next year. I hope that he will. If he has consulted his right hon. Friend the Minister

of Agriculture, he will be forced to say that, or perhaps once again the right hon. Gentleman has no interest in this sort of thing, but I find that difficult to believe.
I turn for a moment to the incidence of this tax. I understand that heavy hydrocarbon oils are not affected by the duty which is being raised by this Clause, but this duty does affect petrol and derv used in tractors on farms, and, as my hon. Friend said, it affects the horticultural industry because of the light machines which are used in that industry. I am sure that the Chief Secretary knows that it is the small farm and the small farmer who will have to bear the maximum burden of this increase of 6d. in the tax.
I have many small farmers in my constituency. Indeed, in the West Country they make up the largest proportion of farmers. These are the people who will have to bear the bulk of this extra cost of £2½ million, because often they do not use the more powerful and bigger diesel tractors. They use petrol tractors and tractors which use derv. They also use other types of machinery which require this type of fuel for their operation. Thus, I think that it is fair to say that the incidence of this tax will be concentrated on the small farmer, the one who is least able to bear it. I am certain that the hon. Member has not realised this. Perhaps the Minister of Agriculture, who shows his lack of interest in this matter by not attending, has not pointed it out to him.
I shall not go into details of the exact cost of running a tractor for so many hours on this or that type of fuel, but I do not think that the industry is in a state to bear this extra tax. I am sure that the small farmer is not in a position to bear it, on top of the other extra costs which the Labour Government have imposed on him and upon the industry generally in the past few weeks.
It is extraordinary that the hon. Member for Kettering (Sir G. de Freitas) is not here, because he made a smashing attack on the increase on the fuel oil tax in one Budget. He should be here to reinforce our attack upon the effect of this proposal on the farmers.
This is an unfair tax. The Amendment has a most respectable precedent and it should be adopted. This tax will bear harshly upon the small farmer, who


can least bear it. This loss cannot be recouped in the forthcoming Price Review, because there is so much to be recouped already—£23 million or £25 million. It is disgraceful that the Minister of Agriculture or one of his two Parliamentary Secretaries should not be here. I hope that the Committee will support the Amendment.

Mr. Marcus Kimball: I hope hat the Minister will give us a favourable reply. My hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) has put some valid arguments in connection with the agriculture industry, emphasising that this serious increased cost cannot be taken into account at the Annual Price Review.
As for the Price Review itself, it is fair to say that people throughout the country are already becoming extremely apprehensive because of the extravagance of the Government and the way they are spending public money at the moment. It makes us all fear that there will be no money left in the "kitty" when the Price Review comes around. I am certain that the hon. Member has already had warnings within the Treasury about the likely bill to be paid in relation to the Price Review. I would have thought that the hon. Member would be very worried about it.
There has already been an increase in wages for which the industry must have full recoupment, and it is not satisfactory to tell the Committee that in addition to that heavy expense, for which the industry will have to be recouped, there is to be this extra increase in the duty on petrol and diesel oil. I hope that the Chief Secretary will give us a favourable answer this afternoon, especially in view of the way in which the Price Review arithmetic is bound to go. If the hon. Member can say something to allay the fears about the way in which the Price Review will go—and I can assure him that those fears are certainly felt by my constituents—we shall be grateful to him.
I should like to know how this increase will affect the many farmers who still have no mains electricity. Will they have to pay this extra tax for the oil they use for their generating plants? The hon. Member will recollect that

when previous increases have been made in fuel duty a special rebate scheme has been introduced in respect of private generators where mains electricity is not available. If this increase in duty will have to be paid in respect of small generating sets in places where mains electricity is not available I hope that the hon. Member will begin consultations immediately with the electricity suppliers—the Hydro-Electric Board in Scotland and the electricity boards in England—to see what can be done to speed up the supply of electricity to farms in rural areas. I should declare an interest in this matter. I am without mains electricity myself in various places and I feel very apprehensive about this increase in costs.
I hope that the hon. Member will also bear in mind the increase in cost that this will mean to the farm workers. He must be aware of the serious problem of rural transport, especially in parts of the country like Lincolnshire, where the public transport service is practically non-existent. The argument is that everybody has his own car and goes to work in it, but the Minister should bear in mind that everybody is forced to go to work in his own car, and is therefore forced to pay the increase in petrol duty. It is, therefore, a matter which must be taken into account by the Agricultural Wages Board. That will mean yet another increase in costs for the industry.
I hope that we will have a satisfactory answer from the hon. Member which will show us that he has the feelings and worries of the countryside at heart.

Mr. Geoffrey Wilson: I support the Amendment, partly because agriculture is the most important industry in my constituency but also because of the precedent mentioned by my hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) in the Finance Bill of 1928. I do not know whether the Chief Secretary has read the debate on that Bill. If he has, he will know that on that occasion Mr. Winston Churchill—as he then was—who was then Chancellor of the Exchequer, gave a large concession in connection with derating. To pay for it a tax was put on fuel for motor vehicles. It was orginally proposed that a concession


should me made in respect of both agriculture and fishing, but as a concession had been pressed for in respect of kerosene, on the ground that that was the fuel used by the poorest section of the community, that concession was granted and the concession for agriculture and fishing was withdrawn.
The predecessor of my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins)—Commander Williams—persuaded the Chancellor to restore the concession for fishing, during the Report stage of the Bill, and that concession has worked quite satisfactorily for more than 30 years. The argument is sometimes used that once a concession is given it multiplies and proliferates in all sorts of directions. In one debate it was suggested that it was like making a crack in a diving bell—the water flooded in. Similarly, it was suggested that the whole tax system would be flooded if a concession was once given. However, the concession then given in respect of fishing more than 30 years ago has worked satisfactorily, and there seems no reason why a small concession of this sort should not now be given to agriculture.
I relate this history to show that the concession for fishing has worked well, and I would remind the Committee that it was the original intention of the 1928 Finance Bill that a similar concession to argriculture should be given.

Mr. Aidan Crawley: I support the Amendment. I also regret the fact that there is no representative of the Ministry of Agriculture here. If one were here he might be able to induce the Chief Secretary to regard the Amendment with rather more sympathy than he seems to be doing at the moment. I know it is traditional that Treasury Ministers do not approve of agriculture. They regard it as something which costs them money, but they are wrong. Agriculture is not only our largest industry, with a turnover running into thousands of millions of pounds, from which the Treasury benefits; I would ask the Treasury how it could do without some of agriculture's by-products—alcoholic liquors. The Treasury should be very sympathetic towards agriculture.
I support the Amendment chiefly on behalf of the small farmer. To the economist the small farmer is an anachronism.

Economists would like to eliminate or collectivise him. The fact is that the small farmers are not merely the backbone but the bulk of the agricultural industry, and unless we are to have Governments that use compulsion to a degree that I hope no British Government ever will use, they will remain the backbone.
4.0 p.m.
The Chief Secretary will know—and, if he does not. his right hon. Friend the Minister of Agriculture can certainly tell him—that the small farmers live on very narrow margins. A great many surveys have been made by university agricultural departments, some of them relating to my own constituency, showing that on holdings of under 100 acres, which are what most of the small farmers of my constituency have, incomes vary from about £2,000 a year—very rarely—to as low as £300 a year for a man and his family. In some areas the majority are living on incomes of below £500 a year.
To those people, petrol used purely for agricultural purposes is one of their heaviest expenditures, particularly when they are farming in very hilly areas, such as west Derbyshire, where tractors are almost always in low gear. Any addition to the petrol bill is a very serious inroad into an already very narrow margin. The Treasury need not just say that these people should make themselves more efficient. Taking advantage of the various Measures produced by my right hon. Friends in the last few years, these farmers have been doing their utmost to make themselves more efficient. In Derbyshire, there have been about 5,000 applications under the various grant schemes, and an enormous amount has been done to increase efficiency.
Nevertheless, what these men can do is limited. It is not only the nature of the country but very often the nature of the holdings which, for historical reasons that cannot be overcome, are widely scattered. The cost of petrol for transport and tractor work is one of their main problems, and an increased bill will reduce their incomes. I therefore hope that the Chief Secretary would consult his right hon. Friend the Minister of Agriculture to find out whether he cannot view this Amendment sympathetically, and so help our largest basic industry.

Mr. Christopher Soames: Has the Chief Secretary consulted his right hon. Friend the Minister of Agriculture on the importance of this Amendment to the agricultural industry? If so, has his right hon. Friend pointed out to him that the result of not accepting the Amendment must be to add to the costs of the industry? Given that fact, what course can the Government take to mitigate that increased cost? They can ignore this Amendment, and so make the industry suffer the increased cost without getting anything to compensate in return. Alternatively, they can meet that increased cost by giving increased prices for certain guaranteed commodities at the Annual Price Review. If they take the latter course, what about the disinflationary aspect of the tax, of which the party opposite has made much? If the Government impose this extra cost on the farmer, the industry suffers—to what avail?
I am sure that the hon. Gentleman will say that it is very difficult to mitigate the effect of the tax, but I ask him most seriously to consider whether he could not mitigate it in the way suggested in the Amendment. Costs in the agricultural industry inevitably rise year by year—there are so many factors involved—and all Governments must do all they possibly can not to make things worse by imposing upon it unnecessary cost burdens.
I should have thought that the Amendment could have been accepted. should like to think that the Minister of Agriculture made just such a case to the Chancellor as has been made by my hon. Friends in this debate. Perhaps the Chief Secretary will tell us what the nation gains by the imposition of this tax on agriculture—our basic and so important industry. Of course, increased prices for certain guaranteed commodities would not have the same effect on the industry as would the remission of the tax as suggested in the Amendment because, as many of my hon. Friends have pointed out, this extra cost falls more heavily on certain farmers on certain types of land than it does on others. My hon. Friend the Member for Derbyshire, West (Mr. Crawley) has spoken about farming on the steep hills; such a tax as this falls harder on farmers in places like that than it does on those who farm in the plain.
The most sensible approach would be for the hon. Gentleman to accept the Amendment, and I very much hope that he will do so. I hope that he will be able to tell us that, after consulting his right hon. Friend—of whom, or of the Joint Parliamentary Secretaries to the Ministry, I had hoped to ask some questions—he will accept the Amendment. If he does not do so, I hope that at least he will give an assurance that the agricultural industry will not be made to suffer from this tax, and will, as a second best, have it made good in the Price Review.

Mr. G. R. Howard: As has been said, this imposition bears hard on those engaged in horticulture and not covered by the Price Review, who are already being treated most unfairly in relation to the 15 per cent. surcharge. Many importers are suffering hardship in that connection, but the Government have exempted fresh vegetable imports from the surcharge. That means that people in the horticultural industry are not protected by the surcharge as many in other industries are. Now they face this increased cost, which they cannot recoup in the Annual Price Review. Horticultural costs in the Isles of Scilly, where the Prime Minister has a small house, are enormously increased because everything has to be shipped, and those people are now to be exposed to this additional financial suffering.
I support the Amendment very strongly indeed, and hope that we can get a sympathetic hearing from the Government.

The Chief Secretary to the Treasury (Mr. John Diamond): I hope that the right hon. Member for Bedford (Mr. Soames) will acquit me of any discourtesy in not immediately following him, but I wanted to give his hon. Friends an opportunity to participate in the debate before I replied.
As my right hon. Friend the Minister of Agriculture has been so attacked, it is my first duty to explain why it is impossible for him to be here today. He was present yesterday, when it was hoped and expected that this point would be reached, but early last evening it became obvious—as I happen to know, because I have responsibility in the matter—that it would not be reached


then. Therefore, there was no reason for my right hon. Friend to stay all night merely to be looked at by right hon. and hon. Members opposite.
The hon. Member for Cornwall, North (Mr. Scott-Hopkins) did not merely draw attention to the fact that the Minister of Agriculture was not here—he mentioned it four times. When an hon. Member mentions a thing once then the Committee is aware of the point. When he mentions it four times then the Committee is aware that a personal attack is being made, and it is because a personal attack is being made on my right hon. Friend the Minister of Agriculture that I am bound to explain that my right hon. Friend was here yesterday and would have been here today had it not been for the fact that he is at this moment talking to farmers. He is addressing a meeting of members of the N.F.U. at the Farmers' Club.
When that engagement was accepted, there was no possible means of knowing that this Clause would be discussed simultaneously. It is monstrous of the hon. Member for Cornwall, North to keep on pursuing a personal attack in that way. He could easily have found out through the normal channels what my right hon. Friend the Minister of Agriculture was doing today. It was quite unnecessary for him to refer to my right hon. Friend's absence four times in a short speech. I do not know what else he said in his speech other than to attack my right hon. Friend.

Mr. Scott-Hopkins: The Chief Secretary has not explained why the two Parliamentary Secretaries are not here, either. The Minister of Agriculture knew that this debate would come and surely some arrangement could have been made to have someone from the Ministry here today.

Mr. Diamond: I do not know whether the hon. Member's reference to the Parliamentary Secretaries is to be taken as an apology for what he previously said in attacking my right hon. Friend the Minister of Agriculture. Apparently he does not intend to offer the courtesy of an apology to the Committee.

Mr. Scott-Hopkins: I have no intention of withdrawing what I have said.

Mr. Diamond: The facts are on the record. My right hon. Friend was attacked only last week by some hon. Members opposite—as I was not present I do not know whether they included the hon. Member for Cornwall, North—for not being willing to talk to farmers. Now he is engaged in that very pursuit, and it is hard that he should be singled out today for a personal attack of that kind. We should try to discuss this matter in a certain way.

The Chairman: Order. I hope that we can now get to the Amendment.

Mr. Diamond: I am grateful to you, Dr. King, for having given me an opportunity to reply to the four references to the Minister of Agriculture which were made by the hon. Member for Cornwall, North.
I am grateful to the hon. Member for Rye (Mr. Bryant Godman Irvine) for the helpful and clear way in which he moved the Amendment. He speaks with great authority on this matter. I have had the pleasure of hearing him on many occasions and I listened to him today with great sympathy. Of course, my right hon. Friend the Minister of Agriculture has been fully consulted on the Amendments concerning agriculture and I am fully aware of his views. I propose to deal with the problem in general principle and then to answer detailed points put by hon. Members.
The purpose of the Amendment is well understood. It is an attempt to relieve farmers and horticulturists from the increase in the duty. But it goes a little wider, because of the drafting. However, no one wants to dwell on a minor drafting point. It is clear that the method proposed is not satisfactory in any way. It is a method impossible to administer because there would be no means of separating the consumption of petrol for different uses once the rebate were given. There would be no means of preventing it from being used for purposes which were not intended by hon. Members.
4.15 p.m.
That is, of course, one of the reasons why the right hon. Member for Bedford and his right hon. Friends, when in government, never—I repeat, never—attempted to deal with the matter in this way. When they introduced an increase


in petrol duty they never attempted to give help to the farming community in the way proposed by the Amendment. There is, of course, a far better way of giving that help, which I shall come to in a moment. Now I am concentrating on the method proposed in the Amendment.

Mr. G. R. Howard: The hon. Gentleman says that there has been no previous method of differentiating in this duty. I mentioned the Isles of Scilly. On most of the islands there are no cars. There are no roads for them. But there are tractors and other farm vehicles, so, in their case at least, the petrol could not be used for any other purpose.

Mr. Diamond: I have not made a detailed examination of the Isles of Scilly. It will be a difficult situation if we have to legislate exclusively for the Isles of Scilly. Possibly the hon. Gentleman will accept my main argument that one could not administer the method proposed satisfactorily. The method of helping that the Government adopt in these cases and which my right hon. Friend the Minister of Agriculture is prepared to adopt in this case is through the Annual Price Review. Indeed, he has already said so. In a reply on 18th November, he said that the increased duty on oils would be taken into account on the occasion of the next Annual Price Review in relation to agriculture.
Since it is clear that the method proposed in the Amendment is not satisfactory, and as my right hon. Friend has stated clearly that this increase in duty will be taken into account in the next Price Review, surely it would be better to leave this problem to be tackled in that way, which would be the best method of doing what the Amendment tries to achieve. There are various difficulties in drafting. It would not be helpful at this point to go into them and I therefore come to the conclusion that, in principle, the Amendment cannot be recommended by the Government to the Committee.

Mr. Geoffrey Wilson: What is the difference between using this method for agriculture and using it for fishing?

Mr. Diamond: I am not fully aware, to be frank, about the situation with regard to fishing. I gather that the hon. Gentleman is referring to a pro-

posal made in 1928. I am not fully aware of that. Nevertheless, for the reasons I have indicated, the system would not work in the case of agriculture. Both Conservative and Labour Governments have agreed on that. There is no need to adopt a method which would not work when one already has a method—the Annual Price Review—which does work. I hope, therefore, that the Amendment will not be pressed.
Specific questions were asked of me. The hon. Member for Gainsborough (Mr. Kimball) asked what the effect would be on oil for small generators. There will be no effect because that oil is not covered in the Bill, which deals with heavy oils. If he is talking about petrol being used to the extent that the engine is a petrol-driven one, then it must bear the duty in the ordinary way. Most of these machines, however, use gas oil, which is not affected.
I have dealt as fully but as shortly as I can with the points raised and I hope that the Committee will agree that, while there is full understanding of the purpose sought to be achieved by the Amendment, a satisfactory method of achieving the purpose already exists. There was an attempt to bring such a scheme as that suggested into force by the Labour Government in 1951, but it was never attempted again by the Conservatives during their 13 years of office which followed. There is a better method of reaching a solution of the problem and as my right hon. Friend the Minister of Agriculture has already given a satisfactory answer there will be no need to pursue the Amendment.

Mr. Reginald Maudling: There are one or two points which make me think that the answer of the Chief Secretary, though courteous as always, is not quite enough to satisfy. I understand that the Minister of Agriculture has an engagement, but I am a little surprised that it is not possible for one of the Parliamentary Secretaries to be present during a discussion which is of considerable importance to the agriculture industry.

Mr. Diamond: I apologise that I did not go on to answer that point in my speech. Neither of the Parliamentary Secretaries is present because they are


both engaged on legislation, to be introduced in due course, affecting farmers.

Mr. Maudling: I think that the claims of this Committee are, on the whole, regarded as paramount, or close to paramount, and I would have thought it possible for there to be some representation from the Ministry of Agriculture on this occasion.
Coming to the argument, I still find it a little difficult to understand what the Government are trying to do by the duty. They say that it is disinflationary, on the old doctrine that it is disinflationary to raise prices to the consumer. We therefore assume that it is their desire that the total additional cost of the increase in the duty should be passed on in the form of increased prices to the consumer, because if it is not passed on to the consumer it is not disinflationary.
Therefore, we assume—I am not quite certain whether this is the Government's point of view—that the totality of the additional cost to the farmer of the increase in the duty will be added to prices in the Price Review; otherwise, it is not carrying out their purpose. We assume that the purpose of the whole thing is to increase the price of farm produce to the consumer by that amount when the next Price Review comes along.
We think that this is very unsatisfactory because it ignores the position of horticulture, which is very important. The Government are in the difficulty that the systems of supporting agricultural and horticultural products in this country have differed over many years. The system of support for the basic agricultural commodities is one which admits of an increase in prices to compensate for an increase in costs. This is not true of horticulture, and from the reply of the Chief Secretary I cannot see any consolation whatever for horticultural producers for this large increase in their costs which inevitably will be involved from the increase in duty.
For that reason, if for no other, I think that the Government's reply has not been satisfactory.

Mr. J. M. L. Prior: I apologise to the Committee for not being present when the debate started. I, too, was attending the meeting in which the Minister was involved. I can tell the

Committee that the Minister made a very good speech, because he upheld the policy which my right hon. Friends pursued very successfully during the last four years and we heard nothing of the new agricultural policy about which we heard so much just before the election. From that point of view, I can assure the Chief Secretary that the Minister's time was not wasted. While he pursues the policies which he adumbrated to the farmers today, I am certain that he will have their support.
I always think that on these occasions it is interesting to look back at debates which took place in bygone days on similar subjects. I must draw the Committee's attention to a debate which took place in 1961. At that time Mr. Percy Browne was speaking about the imposition of the oil duty. He accused the then Opposition of trying to obtain one or two extra agricultural seats at the next General Election. He was interrupted by the hon. Member for Leek (Mr. Harold Davies), who said:
 We shall get many more."—[OFFICIAL REPORT, 16th May, 1961; Vol. 640, c. 1130.]
I have done a little research on the subject of that debate. It is possible that the Labour Party might claim that they got one extra agricultural seat.

The Chairman: I should be grateful to the hon. Gentleman if he came to the Amendment.

Mr. Prior: I was just coming to the Amendment, Dr. King. They may have got one agricultural seat, but in getting one they lost one.
If the Labour Government continue with the disastrous policy towards British agriculture which they have adopted in the first 40 days, they will not get any seats at all at the next election, because the Chief Secretary has completely overlooked the fact that the Amendment is particularly designed to help horticulture. Horticulture can have no protection through an Annual Price Review. It is the industry which is most affected by the increase in the duty. At a time when we are trying to improve marketing particularly in horticulture—marketing involves transport far more in horticulture than it does in agriculture—an extra imposition is being placed on the industry, an imposition which cannot possibly be replaced by increased prices for horticultural products.
I therefore hope that between now and Report the Chief Secretary will be able to come along with some form of rebate for horticulture. This is possible. We know from the National Farmers' Union that a perfectly reasonable system has been worked out in certain American States. There is no reason why that should not be done here. Unless we have

a more reasonable reply than we have heard so far, I hope that my right hon. Friend will divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 222, Noes 251.

Division No. 16.]
AYES
[4.25 p.m.


Agnew, Commander Sir Peter
Fletcher-Cooke, Charles Darwen)
Mackie, George Y. (C'ness &amp; S'land)


Alison, Michael (Barkston Ash)
Forrest, George
McMaster, Stanley


Allason, James (Hemel Hempstead)
Foster, Sir John
McNair-Wilson, Patrick


Amery, Rt. Hn. Julian
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Maginnis, John E.


Astor, John
Fraser, Ian (Plymouth, Sutton)
Maitland, Sir John


Awdry, Daniel
Gardner, Edward
Marten, Neil


Baker, W. H. K.
Gibson-Watt, David
Mathew, Robert


Balniel, Lord
Giles, Rear-Admiral Morgan
Maude, Angus E. U.


Barlow, Sir John
Gilmour, Sir John (East Fife)
Maudling, Rt. Hn. Reginald


Batsford, Brian
Glover, Sir Douglas
Mawby, Ray


Beamish, Col. Sir Tufton
Glyn, Sir Richard
Maxwell-Hyslop, R. J.


Bennett, F. M. (Torquay)
Goodhew, Victor
Maydon, Lt.-Cmdr. S. L. C.


Berry, Hn. Anthony
Gower, Raymond
Meyer, Sir Anthony


Bessell, Peter
Grant, Anthony
Mills, Peter (Torrington)


Biffen, John
Grant-Ferris, R.
Mills, Stratton (Belfast, N.)


Biggs-Davison, John
Grieve, Percy
Miscampbell, Norman


Bingham, R. M.
Griffiths, Eldon (Bury St. Edmunds)
Mitchell, David


Black, Sir Cyril
Griffiths, Peter (Smethwick)
Monro, Hector


Blaker, Peter
Grimond, Rt. Hn. J.
More, Jasper


Bowen, Roderic (Cardigan)
Gurden, Harold
Morgan, W. G.


Box, Donald
Hall, John (Wycombe)
Morrison, Charles (Devizes)


Boyd-Carpenter, Rt. Hn. J.
Hall-Davis, A. G. F.
Mott-Radclyffe, Sir Charles


Boyle, Rt. Hn. Sir Edward
Hamilton, Marquess of (Fermanagh)
Murton, Oscar


Braine, Bernard
Harris, Frederic (Croydon, N. W.)
Nicholls, Sir Harmar


Brewis, John
Hawkins, Paul
Noble, Rt. Hn. Michael


Brinton, Sir Tatton
Hay, John
Nugent, Rt. Hn. Sir Richard


Bromley-Davenport, Lt.-Col.Sir Walter
Heald, Rt. Hn, Sir Lionel
Onslow Cranley


Brooke, Rt. Hn. Henry
Heath, Rt. Hn. Edward
Orr Capt. L. P. S.


Brown, Sir Edward (Bath)
Hendry, Forbes
Orr-Ewing Sir Ian


Bruce-Gardyne, J.
Higgins, Terence L.
Osborn, John (Hallam)


Buchanan-Smith, Alick
Hiley, Joseph
Page John (Harrow, W)


Burden, F. A.
Hill, J. E. B. (S. Norfolk)
Page, R. Graham (Crosby)


Butcher, Sir Herbert
Hirst, Geoffrey
Pearson, Frank (Clitheroe)


Butler, Rt. Hn. R. A. (Saffron Walden)
Hordern, Peter
Peyton, John


Campbell, Gordon
Hornsby-Smith, Rt. Hn. Dame P.
Pickthorn, Sir Kenneth


Carlisle, Mark
Howard, Hn. G. R. (St. Ives)
Pitt, Dame Edith


Carr, Rt. Hn. Robert
Hunt, John (Bromley)
Pounder, Rafton


Cary, Sir Robert
Hutchison, Michael Clark
Powell Rt. Hn. J. Enoch


Channon, H. P. G.
Irvine, Bryant Godman (Rye)
Prior, J. M. L.


Chataway, Christopher
Jenkin, Patrick (Woodford)
Pym, Francis


Chichester-Clark, R.
Jennings, J. C.
Quennell, Miss J. M.


Clark, William (Nottingham, S.)
Johnston, Russell (Inverness)
Ramsden, Rt. Hn. James


Clarke, Brig. Terence (Portsmth, W.)
Jopling, Michael
Rawlinson, Rt. Hn. Sir Peter


Cooke, Robert
Joseph, Rt. Hn. Sir Keith
Redmayne, Rt. Hn. Martin


Cooper, A. E.
Kaberry, Sir Donald
Rees-Davies, W. R.


Cooper-Key, Sir Neill
Kerby, Capt. Henry
Renton, Rt. Hn. Sir David


Corfield, F. V.
Kerr, Sir Hamilton (Cambridge)
Ridsdale, Julian


Costain, A. P.
Kershaw, Anthony
Roberts, Sir Peter (Heeley)


Courtney, Cdr. Anthony
Kilfedder, James A.
Robson Brown, Sir William


Craddock, Sir Beresford (Spelthorne)
Kimball, Marcus
Rodgers Sir John (Sevenoaks)


Crawley, Aidan
King, Evelyn (Dorset, S.)
Roots, William


Crosthwaite-Eyre, Col. Sir Oliver
Kitson, Timothy
Russell, Sir Ronald


Cunningham, Sir Knox
Lagden, Godfrey
St. John-Stevas, Norman


Curran, Charles
Lancaster, Col. C. G.
Scott-Hopkins, James


Currie, G. B. H.
Langford-Holt, Sir John
Sinclair, Sir George


Dalkeith, Earl of
Legge-Bourke, Sir Harry
Smyth, Rt. Hn. Brig. Sir John


Dance, James
Litchfield, Capt. John
Spearman, Sir Alexander


Davies, Dr. Wyndham (Perry Barr)
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Stainton, Keith


Dean, Paul
Lloyd, Ian (P'tsm'th, Langstone)
Summers, Sir Spencer


Digby, Simon Wingfield
Lloyd, Rt. Hn. Selwyn (Wirral)
Talbot, John E.


Dodds-Parker, Douglas
Longbottom, Charles
Taylor, Edward M. (G'gow, Cathcart)


Doughty, Charles
Longden, Gilbert
Taylor, Frank (Moss Side)


Douglas-Home, Rt. Hn. Sir Alec
Loveys, Walter H.
Thatcher, Mrs. Margaret


Drayson, G. B.
Lubbock, Eric
Thomas, Sir Leslie (Canterbury)


du Cann, Edward
Lucas-Tooth, Sir Hugh
Thompson, Sir Richard (Croydon, S.)


Eden, Sir John
McAdden, Sir Stephen
Thorneycroft, Rt. Hn. Peter


Fell, Anthony
MacArthur, Ian
Thorpe, Jeremy


Fisher, Nigel
Mackenzie, Alasdair (Ross &amp; Crom'ty)
Tilney, John (Wavertree)




Turton, Rt. Hn. R. H
Weatherill, Bernard
Woodnutt, Mark


Tweedsmuir, Lady
Whitelaw, William
Wylie, N. R.


Vaughan-Morgan, Rt. Hn. Sir John
Williams, Sir Rolf Dudley (Exeter)
Younger, Hn. George


Vickers, Miss Joan
Wills, Sir Gerald (Bridgwater)



Walder, David (High Peak)
Wilson, Geoffrey (Truro)
TELLERS FOR THE AYES:


Walters, Dennis
Wolrige-Gordon, Patrick
Mr. McLaren and Mr. R. W. Elliott.


Ward, Dame Irene
Wood, Rt. Hn. Richard





NOES


Abse, Leo
Foot, Sir Dingle (Ipswich)
Mallalieu,J.P.W.(Huddersfield,E.)


Albu, Austen
Foot, Michael (Ebbw Vale)
Manuel, Archie


Allaun, Frank (Salford, E.)
Ford, Ben
Mapp, Charles


Alldritt, W. H.
Freeson, Reginald
Marsh, Richard


Allen, Scholefield (Crewe)
Galpern, Sir Myer
Mellish, Robert


Armstrong, Ernest
Garrett, W. E.
Mendelson, J. J.


Atkinson, Norman
Garrow, A.
Mikardo, Ian


Bacon, Miss Alice
Ginsburg, David
Millan, Bruce


Bagier, Gordon A. T.
Gourlay, Harry
Miller, Dr. M. S.


Barnett, Joel
Gregory, Arnold
Milne, Edward (Blyth)


Baxter, William
Griffiths, David (Rother Valley)
Molloy, William


Beaney, Alan
Griffiths, Rt. Hn. James (Llanelly)
Monslow, Walter


Bellenger, Rt. Hn. F. J.
Hale, Leslie
Morris, Alfred (Wythenshawe)


Bence, Cyril
Hamilton, James (Bothwell)
Morris, Charles (Openshaw)


Benn, Rt. Hn. Anthony Wedgwood
Hamilton, William (West Fife)
Morris, John (Aberavon)


Bennett, J. (Glasgow, Bridgeton)
Hamling, William (Woolwich, W.)
Murray, Albert


Binns, John
Harper, Joseph
Neal, Harold


Bishop, E. S.
Harrison, Walter (Wakefield)
Newens, Stan


Blackburn, F.
Hart, Mrs. Judith
Noel-Baker, Francis (Swindon)


Blenkinsop, Arthur
Hattersley, Ray
Noel-Baker, Rt. Hn. Philip (Derby, S.)


Boardman, H.
Hayman, F. H.
Oakes, Gordon


Boston, T. G.
Hazell, Bert
O'Malley Brian


Bowden, Rt. Hn. H. W. (Leics. S. W.)
Heffer, Eric S.
Oram, Albert E. (E. Ham, S.)


Bowles, Frank
Henderson, Rt. Hn. Arthur
Orbach, Maurice


Boyden, James
Herbison, Rt. Hn. Margaret
Orme Stanley


Braddock, Mrs. E. M.
Hobden, Dennis (Brighton, K'town)
Oswald, Thomas


Bradley, Tom
Holman, Percy
Owen, Will


Bray, Dr. Jeremy
Horner, John
Padley, Walter


Broughton, Dr. A. D. D.
Houghton, Rt. Hn. Douglas
Page, Derek (King's Lynn)


Brown, Hugh D. (Glasgow, Provan)
Howarth, Harry (Wellingborough)
Paget, R. T.


Brown, R. W. (Shoreditch &amp; Fbury)
Howarth, Robert L.(Bolton, E.)
Palmer, Arthur


Buchan, Norman (Renfrewshire, W.)
Hoy, James
Pannell, Rt. Hn. Charles


Buchanan, Richard
Hughes, Cledwyn (Anglesey)
Pargiter, G. A.


Butler, Herbert (Hackney, C.)
Hughes, Emrys (S. Ayrshire)
Pavitt, Laurence


Butler, Mrs. Joyce (Wood Green)
Hughes, Hector (Aberdeen, N.)
Pearson, Arthur (Pontypridd)


Carmichael, Neil
Hunter, Adam (Dunfermline)
Pentland, Norman


Carter-Jones, Lewis
Hunter, A. E. (Feltham)
Popplewell, Ernest


Coleman, Donald
Irving, Sydney (Dartford)
Prentice, R. E.


Conlan, Bernard
Jackson, Colin
Probert, Arthur


Corbet, Mrs. Freda
Janner, Sir Barnett
Pursey, Cmdr. Harry


Crawshaw, Richard
Jeger, George (Goole)
Rankin, John


Crossman, Rt. Hn. R. H. S.
Jeger, Mrs. Lena (H'b'n&amp;St.P'cras,S.)
Redhead, Edward


Cullen, Mrs. Alice
Jenkins, Hugh (Putney)
Rees, Merlyn


Dalyell, Tam
Jenkins, Rt. Hn. Roy (Stechford)
Reynolds, G. W.


Davies G. Elfed (Rhondda, E.)
Jones, Dan (Burnley)
Rhodes, Geoffrey


Davies Harold (Leek)
Jones, J. Idwal (Wrexham)
 Roberts, Albert (Normanton)


Davies Ifor (Gower)
Jones, T. W. (Merioneth)
Roberts, Goronwy (Caernarvon)


Davies S. O. (Merthyr)
Kelley, Richard
Robertson, John (Paisley)


de Freitas, Sir Geoffrey
Kenyon, Clifford
Rodgers, William (Stockton)


Delargy, Hugh
Lawson, George
Rogers, George (Kensington, N.)


Dell, Edmund
Leadbitter, Ted
Rose, Paul B.


Dempsey, James
Ledger, Ron
Ross, Rt. Hn. William


Diamond, John
Lee, Rt. Hn. Frederich (Newton)
Rowland, Christopher


Dodds, Norman
Lever, Harold (Cheetham)
Sheldon, Robert


Doig, Peter
Lever, L. M. (Ardwick)
Shinwell, Rt. Hn. E.


Donnelly, Desmond
Lewis, Arthur (West Ham, N.)
Shore, Peter (Stepney)


Driberg, Tom
Lewis, Ron (Carlisle)
Short,Rt.Hn.E. (N'castle-on-Tyne,C.)


Duffy, Dr. A. E. P.
Lipton, Marcus
Short, Mrs. Renée (W'hampton,N.E.)


Dunn, James A.
Lomas, Kenneth
Silkin, John (Deptford)


Dunnett, Jack
Loughlin, Charles
Silkin, S. C. (Camberwell, Dulwich)


Edelman, Maurice
Mabon, Dr. J. Dickson
Silverman, Julius (Aston)


Edwards, Rt. Hn. Ness (Caerphilly)
McBride, Neil
Silverman, Sydney (Nelson)


Edwards, Robert (Bilston)
MacColl, James
Skeffington, Arthur


English, Michael
MacDermot, Niall
Slater, Mrs. Harriet (Stoke N.)


Ennals, David
McGuire, Michael
Slater, Joseph (Sedgefield)


Ensor, David
McInnes, James
Small, William


Fernyhough, E.
McKay, Mrs. Margaret
Snow, Julian


Finch, Harold (Bedwelty)
MacKenzie, Gregor (Rutherglen)
Solomons, Henry


Fitch, Alan (Wigan)
Mackie, John (Enfield, E.)
Spriggs, Leslie


Fletcher, Sir Eric (Islington, E.)
MacMillan, Malcolm
Stewart, Rt. Hn. Michael


Fletcher, Ted (Darlington)
MacPherson, Malcolm
Stonehouse, John


Fletcher, Raymond (Ilkeston)
Mahon, Peter (Preston, S.)
Stones, William


Floud, Bernard
Mahon, Simon (Bootle)
Strauss, Rt. Hn. G. R. (Vauxhall)


Foley, Maurice
Mallalieu, E. L. (Brigg)








Summerskill, Dr. Shirley
Varley, Eric G.
Willey, Rt. Hn. Frederick


Swain, Thomas
Wainwright, Edwin
Williams, Alan (Swansea, W.)


Symonds, J. B.
Walden, Brian (All Saints)
Williams, Mrs. Shirley (Hitchin)


Taverne, Dick
Walker, Harold (Doncacter)
Willis, George (Edinburgh, E.)


Taylor, Bernard (Mansfield)
Wallace, George
Wilson, William (Coventry, S.)


Thomas, George (Cardiff, W.)
Warbey, William
Winterbottom, R. E.


Thomas, Iorwerth (Rhondda, W.)
Watkins, Tudor
Woodburn, Rt. Hn. A.


Thomson, George (Dundee, E.)
Weitzman, David
Woof, Robert


Tinn, James
White, Mrs. Eirene
Wyatt, Woodrow


Tuck, Raphael
Whitlock, William



Urwin, T. W.
Wilkins, W. A.
TELLERS FOR THE NOES:




Mr. McCann and Mr. Grey.

Mr. Geoffrey Lloyd: I beg to move Amendment No. 9, in page 2, line 36, at the end to insert:
(4) If on an application made for the purposes of this section by the owner of any public service vehicle it appears to the satisfaction of the Commissioners that the applicant has at any time within the period of six months preceding the date of his application (which date shall be not earlier than six months after the coming into force of this section) used any quantity of hydrocarbon oil for propelling the vehicle, he shall be entitled to obtain from the Commissioners repayment of two-thirteenths of any customs duty or excise duty paid in respect of the oil so used.
In this section the expression "public service vehicle" has the same meaning as in the Road Traffic Act 1960.

The Chairman: It will be for the convenience of the Committee if we also take Amendment No. 10, in line 36.

Mr. Lloyd: The purpose of the Amendment is to allow bus operators in general to claim repayment of the whole of the additional duty which will fall on them as a result of the Chancellor's proposal to raise Customs and Excise duties on petrol and other light hydrocarbon oil and diesel oil for road vehicles by 6d. a gallon. The reasons why we have put forward the Amendment are that an increase in fuel costs which will result from the Chancellor's proposal must raise costs and be reflected in higher fares, thereby affecting the cost-of-living. This it is desirable to avoid if possible, particularly because the lower-paid people and less well-off people in general are particularly dependent upon bus services.
The Chancellor referred to this in his Budget statement and in his Second Reading speech, but he was not very explicit. I hope that we shall have some further enlightenment from the Chief Secretary to the Treasury. The Chancellor was not very explicit because he referred to giving some relief to the operating companies, and I did not feel that it was in his nature or natural to his political posture to give relief to the companies. That is not our

position. Our position is that we wish to avoid a rise in the cost-of-living for the public and I shall presume that that is what the Chancellor had in mind.
The second unsatisfactory feature to us in what the Chancellor said was that he appeared to be referring to the relief which he talked about as being confined to the stage buses. We feel that it would be wrong in principle to confine this rebate to the stage carriage services only. We feel, additionally, that the place for the rebate to be stated is in the Finance Bill. That is why we have brought forward this Amendment. I should like to make it clear to the Committee that we do not believe that the idea of confining any concessions to the stage buses is sound. We cannot be sure that this is the Chancellor's intention, because we are not privy to the discussions which are in progress between the Ministry of Transport and the operators. No doubt the Chief Secretary will enlighten us on this when he addresses the Committee.
If the proposal is to confine the concession to the stage carriage services, we think that this would lead to anomalies, because, for example, it would exclude contract services to carry school children and it would also exclude contracts to carry men to work. The Chief Secretary will probably agree that there is no difference, in principle, between those services and the stage bus services. We feel, therefore, that if the proposal is as I fear, it is unsatisfactory.
Our Amendment is broader, in that it would give the rebate to public service vehicles. The main difference, therefore, between what we believe to be the Government's idea and the proposal which we are putting forward in this Amendment is that we should give it to all public service vehicles, which would include the long-distance services in addition to the stage carriage services.
We think that this is a matter of some importance. The long-distance


bus services are growing. They are a great convenience to many people. In particular, from our inquiries we find that they are a great convenience to people of small means and to pensioners visiting their relatives. While they sometimes take a good deal longer than railway services, they are a good deal cheaper. I would just like to give the Committee a particular example which is apposite to my case—the Midland Red services from Birmingham to London, and vice versa, compared with the train. The second-class return rail fare is 55s. 6d. and the express coach fare is 32s. The non-express coach fare is as low as 27s. It is true that the Railway has a great advantage in time, because the fastest train takes 1 hour and 55 minutes and the fastest coach to Victoria is 3 hours, while the non-express coach takes as long as 5 hours and 20 minutes.
But I think that the Committee will appreciate that there are many people, particularly pensioners, who may not have very great demands on their time, but who find it quite a burden to find the money to visit relatives. For these people this extra saving would be very important. We hope that the Government, on consideration, will include the long-distance services in their concession. We hope very much that they will not be inhibited in this matter by what we have felt in the past has been their prejudice towards road services in general.

4.45 p.m.

Sir David Renton: I feel obliged to draw the attention of the Committee to the effect of the increased tax upon rural bus services. These services have been declining steadily since the war and many are now running at a loss. The decline and the loss have been due partly to steadily increasing costs and partly to the fact that there have been more cars on the road. However, there are, and will be for the foreseeable future, many people in the villages who need buses. Some of them need buses simply for getting to and from their work. The young people in the villages cannot always get work on the land and have to go to the towns to work. They cannot live in the towns and so they travel to and fro. They do not all have cars.
There are people who have to visit the towns for shopping and entertainment, for visiting people in hospital and going to meetings—

Mr. Scott-Hopkins: On a point of order. Is it right that the hon. Gentlemen opposite should carry on conversations in audible voices while my right hon. and learned Friend is speaking?

The Chairman: That is not a point of order, but I would ask hon. Members, if they have conversations to pursue, to do so outside the Committee.

Sir D. Renton: I was accustomed to the normal courtesy of the hon. Member for Nelson and Colne (Mr. Sydney Silverman) when he was interested in what I was talking about. Obviously, he is not interested in rural buses.
I think it reasonable to see that people who live in villages have the opportunity of attending the meetings of voluntary societies, which are mostly held in towns, and even of taking part in local government activities. For these various reasons, in spite of the great increase in the use of the motor car in recent years, rural bus services are and will be needed. Even before the tax was increased, bus operators in my constituency who have approached me have drawn my attention to the fact that they were running so many services at a loss that they might have to cut them unless there were a reduction or a rebate in tax.
What has happened? There is no question of a reduction or a rebate with the advent of the new Government, but an increase in the tax, which alarmingly increases their difficulties. I understand that at the time that the increase in the tax was announced the Government expressed some anxiety about increased fares and said that they would have discussions with the bus operators about this. Since then, speaking for myself, I have heard nothing more about the matter. I should like to know the outcome of these discussions. Of course, we do not want the fares to go up, but even worse, from the point of view of my constituents, would be a further cut in the rural bus services.
I therefore hope that when the Chief Secretary deals with the matters which have been raised by my right hon. Friend the Member for Sutton Coldfield (Mr. G. 

Lloyd), he will also deal with the question of the effect, which could be a most unfortunate one, on rural bus services.

Mr. Daniel Awdry: I naturally hope that the Government will accept Amendment No. 9, but if they do not I hope that they will at least accept Amendment No. 10. It is to that Amendment that I wish to speak. As has been said twice, by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) and my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), the Government has given an undertaking to give tax relief to bus operators, and all that this Amendment does is to turn that undertaking into a precise legal commitment.
The basic cause for giving assistance to rural buses is so well known that it hardly needs repeating. It has been very fully set out in the Jack Committee's Report on Rural Bus Services, which was produced in 1961. That Report made it clear that, even then, the level of rural buses was entirely inadequate to avoid hardship and inconvenience. It went on to say that some way had to be found to give assistance to rural buses. That was in 1961 and now the Government propose their monstrous tax to make the position worse. I represent a rural constituency where this problem has become a great deal more pressing now that a number of our railway stations have been closed. I have received a great deal of correspondence on this and I expect that hon. Members on both sides of the Committee have also received letters. These letters are from mothers whose children have to be taken to school, pensioners who live in villages and want to get into town to shop and people who want to visit their relatives in hospitals or have to have treatment in hospitals themselves or have to see dentists. They rely entirely on buses, and something must be done to improve these services.
The Jack Committee's Report showed that about 10 per cent. of all journeys in rural areas are made by public transport. This 10 per cent. represents the poorer members of the community. Any increase in fuel tax which would lead to a set-back for these rural bus services will hit those people in the community who can afford it the least.

Already, they are grossly hampered by local transport difficulties. People who have no garage or car are complaining about inadequate rural services. The idea behind the Amendment is not new. It follows the practical solution set out in a minority report of the Jack Committee, which was signed by Mr. James.
If the Government cannot face a general tax remission, the least they can do would be to give a remission to that part of the service which operates in rural areas. The Amendment defines rural areas by reference to non-restricted roads. It would be a very easy provision to administer, so do not let us have any talk about it being a provision which could not be administered. It is practical and sensible and could easily be administered. The mileage on rural roads could be recorded and certified by the traffic commissioners. The cost of the relief would not be exorbitant, so do not let us have any talk about it costing too much.
The idea has been considered by the bus operators. It was considered in 1959 at the time of the introduction of the Finance Act of that year and the bus operators said that it would work well. If the Government are sincere in their intention to assist rural services they have an excellent opportunity to indicate that sincerity by accepting the Amendment. With a confidence which is probably entirely misplaced, I ask them to do so.

Mr. Charles Longbottom: We have heard about the needs of rural bus services and I should like to put in a word for the urban services. Since the war a continuing pattern has developed in this country, following slum clearance, of people being rehoused away from the centre of cities, on the outskirts, where new development is taking place. People rely more on getting to and from their place of work by bus every day. The payment of fares from the outskirts of the city to destinations which may be on the other side of the city imposes a greater cost on people who have, it may be, to travel several times a day by bus to and from work. It is another example of the way in which this proposal will increase the cost of living for ordinary people. I hope that the Government will bear this in mind and accept the Amendment.
Many of the homes which are provided in urban areas for old-age pensioners


are built on the outskirts of cities, away from places where the old people used to live and a long way from where members of their family still live, where they may go to shop. It is not, therefore, only the old-age pensioners in the rural areas who may be affected. Those in the urban areas may be affected even more. This is a serious problem and one which I hope will be borne in mind by the Government.

Mr. G. R. Howard: I do not wish to emphasise points which have been made by other hon. Members. Recently, a branch railway line in my constituency was closed. We were told that such closures took place only when there was adequate alternative transport. If the alternative transport is by bus is it fair that, because of such measures as this, the cost of fares must go up? This is something which reacts unfairly on people who are left with only one means of transport. Apart from the points raised by my hon. Friends about increases in the cost of living, any increase which may be made in fuel costs is something which is very important to people living in rural areas.
I hope that the Minister will be able to assure us that he will look at this problem from the point of view of those who live in rural areas and that it may be regarded as a special problem confronting such people where branch railway lines have been closed.

Mr. Peter Bessell: Like my hon. Friend the Member for St. Ives (Mr. G. R. Howard), I have no desire to go over ground which has already been covered adequately, but I wish to add a word in support of the Amendment, chiefly because during the General Election members of the party opposite laid great stress on their determination to give assistance to underpopulated rural areas such as my constituency. These will suffer considerably because of the imposition of this tax, particularly in relation to the fuel used by buses and other rural transport services.
For that reason I believe this to be a worth-while Amendment and I hope that the Government will accept it.

Mr. Diamond: I think that it would be helpful to the Committee if I replied to the debate now and saved hon. and

right hon. Gentlemen opposite from using their energy to push at a half-opened door, which is an unnecessary activity.
One understands the purpose of these Amendments and sympathises, up to a point. I do not wish to make the obvious debating point that one Amendment goes rather too wide and the other is rather narrowly drawn. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) seems to exclude the possibility of providing help in respect of those cases about which other hon. Members spoke exclusively. I take it that hon. Members opposite are saying that although there is a broad general case there is a particularly strong case for giving assistance to rural bus services, which is part of the total case.
We accept that there exists a problem regarding rural buses which must be met. One would go so far as to say that the Amendment does not go far enough, because it deals with a limited kind of rural bus service. The first Amendment goes a little too wide because it deals with a number of cases other than the stage fare services and goes into cases which the right hon. Member for Sutton Coldfield indicated might not be in the same category of need. He explained that the fares on the long-distance coaches from Birmingham to London were, I think, approximately half of the train fares but he said that the passengers had to spend more time travelling. On the face of it, that does not indicate an enormous need for help. Those people are offering a service similar to that provided by the railways, but at approximately half the cost.
Let me say straight away that the Government recognise the need to deal with the problems confronting the travelling public and those going to work. There is a need particularly to deal with the problems of the rural bus services in a way most convenient and most easily capable of administering. That is not by the method proposed in the Amendment, but by the method undertaken long before the Amendment was put on the Notice Paper of making a payment direct to the bus companies concerned by my right hon. Friend the Minister of Transport.
I was asked by the right hon. and learned Member for Huntingdonshire (Sir D. Renton) how far the negotiations have


gone. I would refer him to the Answer given by my right hon. Friend on 25th November, when he said that the Government had told bus operators that it was willing to give relief corresponding to the 6d. increase in duty provided that
 suitable arrangements could be worked out."—[OFFICRL REPORT, 25th November, 1964, Vol. 702, c. 185.]
These are specifically the stage coach operators. That is where the need is greatest, be it in country or town. There would follow the borderline cases, such as a service which was recognised or defined as a long-distance one but which, up to a point also served the short distance traveller.
5.0 p.m.
One can imagine in a rural area a long-distance express service making a minimum charge of perhaps 1s. in effect to cater for the local traveller. These borderline cases are being considered by my right hon. Friend. He has received representations from a number of hon. Members and would be glad to receive others dealing with specific cases which do not fall within the generality of the method by which he is proposing to deal with the matter.
I am saying, therefore, that there is every sympathy not only with the core of the second Amendment, but with a little more. I am saying that the method proposed is not the ideal one, but that the method we are adopting is a more effective one. While hon. Members want to protect themselves in terms of discussion, an opportunity for discussing this matter will arise when the necessary legislation which my right hon. Friend the Minister of Transport would have to introduce comes before Parliament. That will be the time, if any hon. Member considers that my right hon. Friend's proposals go too far, or do not go far enough, for the matter to be raised again.
As I explained, long before the Amendment was tabled the necessary steps were taken. My recollection of the matter is that the Budget was agreed to on one night and the following morning the Minister of Transport was already interviewing the bus company operators. Since we are, in effect, meeting more than the desire of one of the Amendments, though slightly less than required in another, since our method is more appropriate, and having regard to the

rights of hon. Members to debate this matter carefully, I hope that the Committee will agree not to press the Amendment.

Mr. Maudling: The Chief Secretary has once again been courteous in replying to the representations made by my hon. Friends, but I think that they will not regard his answer as being at all satisfactory. On the specific point, the hon. Gentleman has confined himself to stage coach operators and has not dealt with the other important matters to which my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) referred, a matter which I feel he will wish to press.
We are, secondly, left in rather the same difficulty as we were yesterday, for the Government say, "Let this financial provision go through to impose the additional tax and we will subsequently legislate to mitigate the damage." We cannot, as a Committee, be satisfied with that, because we cannot have foreknowledge of the nature of the Government's proposals. For this reason, my hon. Friends are placed in a difficult position.
As my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) asked yesterday, can the Chief Secretary give an assurance that the Government will deal with this before the Report stage is reached? I have no doubt that the Chief Secretary will answer "No", and I must, therefore, advise my hon. Friends—since it is clear that the Government are not prepared or are not in a position to give an assurance of that sort—to take the matter into the Lobby. We must oppose this provision. It may be that the Government will subsequently put the matter right, but since we have no assurance that that will be so, we must record our opposition in the Lobby.

Sir D. Renton: I am sure that my right hon. Friend the Member for Barnet (Mr. Maudling) will not take it amiss if I say that I was grateful for the assurance of the Chief Secretary, as far as it went, although I would like him to clarify the position. The assurance he gave was vague in several respects. Can he now confirm that it is the intention of the Government that all regular rural bus services—that is, stage carriage services in rural districts—will ultimately be exempt from the 6d. increase in the duty?
Will there have to be legislation to legalise the scheme to which the Chief Secretary referred and about which, he said, negotiations with the bus operators are taking place? If so, when will such legislation be introduced, what will be the position meanwhile and will the legislation be made retrospective to the date when the increased duty came into force?

The Chairman: The Question is—

Mr. Diamond: rose—

The Chairman: Mr. Diamond.

Mr. Diamond: I can well understand your rising to put the Question, Dr. King, because I had covered precisely the questions asked by the right hon. Member for Thirsk and Malton (Mr. Turton) in the answer I gave, but I am delighted to repeat what I said if that will help the Committee.
My right hon. Friend said that the Government had told the bus operators—and that includes rural bus operators—that they were willing to give relief corresponding to the 6d. increase in duty, provided that suitable arrangements could be worked out.

Mr. Geoffrey Wilson: What does that mean?

Mr. Diamond: It means that if one cannot find methods of doing it one cannot do it. But we hope to do it. I do not think that there is anything difficult about that.
The right hon. Member for Thirsk and Malton then asked when legislation would be introduced. I said that it would be introduced and that that would be the opportunity for hon. Members to debate the matter if they considered that it was either satisfactory or unsatisfactory in any respect. As to the question of timing—when legislation will be introduced—the answer is as soon as the arrangements have been agreed. As the right hon. Member for Barnet (Mr. Maudling) assumed, I could not possibly give an undertaking that this will be achieved by next week.

Mr. G. R. Howard: I do not think that the explanation of the Chief Secretary is as clear to the Committee as it Is to himself. As I understand, conversations

will take place with the bus operators to see whether the giving of relief to them is practicable. Only then, after those conversations have taken place and if the Government decide to take steps, will legislation be introduced. The Committee has been given no assurance that legislation will be forthcoming. Is that the position; that the Government hope to bring forward legislation but that the Chief Secretary is not prepared to undertake that it will be brought forward?

Mr. Diamond: I am sorry that I am not explaining properly what is certainly clear to me. Obviously, my lack of powers of exposition are in question. I will, therefore, repeat my remarks, and I hope that this time they will be clear to the Committee.
The Government are anxious to see that no damage is suffered by the travelling public from the point of view of the stage coach services. We therefore desire to bring in legislation to give effect to our wish to give relief in respect of the 6d. extra duty which is now being imposed. I hope that that is clear so far. As there are problems involved, and as it is not simply a question of writing a cheque, these matters must be discussed. This is a courtesy due to the bus operators. We must find out their problems and see exactly where the line should be drawn. As soon as these discussions have been completed—they are in progress; they started the morning after the Budget was agreed to—my right hon. Friend the Minister of Transport will make arrangements for legislation to be introduced. I do not think that I can be of any more help to the Committee.

Sir D. Renton: Will it be retrospective?

Several Hon. Members: rose—

The Chairman: Order. I had thought that in view of the remarks of the Opposition Front Bench the Committee was anxious to come to a decision.

Question put, That those words be there inserted:—

The Committee divided: Ayes 232, Noes 253.

Division No. 17.]
AYES
[5.10 p.m.


Agnew, Sir Peter
Amery, Rt. Hn. Julian
Awdry, Daniel


Alison, M. J. H. (Barkston Ash)
Astor, J.
Baker, W. H. K.


Allason, James
Atkins, Humphrey
Barlow, Sir John




Batsford, Brian
Grant, Anthony
Monro, Hector


Beamish, Col. Sir Tufton
Grant-Ferris, R.
More, Jasper


Bennett, F. M. (Torquay)
Griffiths, Eldon (Bury St. Edmunds)
Morgan, W. G.


Berkeley, Humphry
Griffiths, Peter (Smethwick)
Morrison, Charles (Devizes)


Berry, A. G.
Grimond, Rt. Hn. J.
Mott-Radclyffe, Sir Charles


Bessell, Peter
Gurden, Harold
Murton, Oscar


Biffen, John
Hall, John (Wycombe)
Nicholls, Sir Harmar


Biggs-Davison, John
Hall-Davis, A. G. F.
Nicholson, Sir Godfrey


Bingham, R. M.
Harris, Frederic (Croydon, N. W.)
Noble, Rt. Hn. Michael


Birch, Rt. Hn. Nigel
Harris, Reader (Heston)
Nugent, Rt. Hn. Sir Richard


Black, Sir Cyril
Harrison, Col. Sir Harwood (Eye)
Onslow, Cranley


Blaker, Peter
Hawkins, Paul
Orr, Capt. L. P. S.


Bowen, Roderic (Cardigan)
Heald, Rt. Hn. Sir Lionel
Orr-Ewing, Sir Ian


Box, Donald
Heath, Rt. Hn. Edward
Osborn, John (Hallam)


Boyd-Carpenter, Rt. Hn. J.
Hendry, Forbes
Page, John (Harrow, W.)


Boyle, Rt. Hn. Sir Edward
Higgins, Terence L.
Page, R. Graham (Crosby)


Braine, Bernard
Hiley, Joseph
Pearson, Frank (Clitheroe)


Brewis, John
Hill, J. E. B. (S. Norfolk)
Percival, Ian


Brinton, Sir E. T. C.
Hirst, Geoffrey
Peyton, John


Bromley-Davenport,Lt.-Col.Sir Walter
Hordern, Peter
Pickthorn, Sir Kenneth


Brooke, Rt. Hn. Henry
Hornby, Richard
Pike, Miss Mervyn


Brown, Sir Edward (Bath)
Hornsby-Smith, Rt. Hn. Dame P.
Pitt, Dame Edith


Bruce-Gardyne, J.
Howard, Hn. G. R. (St. Ives)
Pounder, Rafton


Buchanan-Smith, A. L.
Howe, Geoffrey (Bebington)
Powell, Rt. Hn. J. Enoch


Buck, Antony
Hunt, John (Bromley)
Prior, J. M. L.


Burden, F. A.
Hutchison, Michael Clark
Quennell, Miss J. M.


Butcher, Sir Herbert
Irvine, Bryant Godman (Rye)
Ramsden, Rt. Hn. James


Butler, Rt. Hn. R. A. (Saffron Walden)
Jenkin, Patrick (Woodford)
Rawlinson, Rt. Hn. Sir Peter


Campbell, Gordon
Jennings, J. C.
Redmayne, Rt. Hn. Martin


Carlisle, Mark
Johnston, Russell (Inverness)
Rees-Davies, W. R.


Carr, Rt. Hn. Robert
Jones, Arthur (Northants, S.)
Renton, Rt. Hn. Sir David


Cary, Sir Robert
Jopling, Michael
Ridsdale, Julian


Channon, H. P. G.
Joseph, Rt. Hn. Sir Keith
Roberts, Sir Peter (Heeley)


Chataway, Christopher
Kaberry, Sir Donald
Robson Brown, Sir William


Chichester-Clark, R.
Kerby, Capt. Henry
Rodgers, Sir John (Sevenoaks)


Clark, William (Nottingham, S.)
Kerr, Sir Hamilton (Cambridge)
Roots, William


Clarke, Brig. Terence (Portsmth, W.)
Kershaw, Anthony
St. John-Stevas, Norman


Cooke, Robert
Kilfedder, James A.
Scott-Hopkins, James


Cooper, A. E.
Kimball, Marcus
Sharples, Richard


Cooper-Key, Sir Neill
King, Evelyn (Dorset, S.)
Sinclair, Sir George


Corfield, F. V.
Kitson, Timothy
Smyth, Rt. Hn. Brig. Sir John


Costain, A. P.
Lagden, Godfrey
Spearman, Sir Alexander


Courtney, Cdr. Anthony
Lancaster, Col. C. G.
Speir, Rupert


Craddock, Sir Beresford (Spelthorne)
Langford-Holt, Sir John
Stainton, Keith


Crawley, Aidan
Legge-Bourke, Sir Harry
Summers, Sir Spencer


Cunningham, Sir Knox
Litchfield, Capt. John
Talbot, John E.


Curran, Charles
Lloyd, Rt.Hn.Geoffrey (Sut'nC'dfleld)
Taylor, Edward M. (G'gow, Cathcart)


Currie, G. B. H.
Lloyd, Ian (P'tsm'th, Langstone)
Taylor, Frank (Moss Side)


Dalkeith, Earl of
Lloyd, Rt. Hn. Selwyn (Wirral)
Thatcher, Mrs. Margaret


Dance, James
Longbottom, Charles
Thomas, Sir Leslie (Canterbury)


Davies, Dr. Wyndham (Perry Barr)
Longden, Gilbert
Thompson, Sir Richard (Croydon, S.)


d'Avigdor-Goldsmid, Sir Henry
Loveys, Walter H.
Thorpe, Jeremy


Dean, Paul
Lubbock, Eric
Tilney, John (Wavertree)


Digby, Simon Wingfield
Lucas-Tooth, Sir Hugh
Turton, Rt. Hn. R. H.


Dodds-Parker, Douglas
McAdden, Sir Stephen
Tweedsmuir, Lady


Doughty, Charles
MacArthur, Ian
van Straubenzee, W. R.


Drayson, G. B.
Mackenzie, Alasdair (Ross &amp; Crom'ty)
Vaughan-Morgan, Rt. Hn. Sir John


du Cann, Edward
Mackie, George Y. (C'ness &amp; S'land)
Walder, David (High Peak)


Eden, Sir John
McLaren, Martin
Walker, Peter (Worcester)


Fell, Anthony
McMaster, Stanley
Walters, Dennis


Fisher, Nigel
McNair-Wilson, Patrick
Ward, Dame Irene


Fletcher-Cooke, Charles Darwen)
Maginnis, John E.
Whitelaw, William


Forrest, George
Maitland, Sir John
Williams, Sir Rolf Dudley (Exeter)


Foster, Sir John
Marten, Neil
Wills, Sir Gerald (Bridgwater)


Fraser, Rt.Hn.Hugh(St'fford &amp; Stone)
Mathew, Robert
Wilson, Geoffrey (Truro)


Fraser, Ian (Plymouth, Sutton)
Maude, Angus E. U.
Wolrige-Gordon, Patrick


Gammans, Lady
Maudling, Rt. Hn. Reginald
Wood, Rt. Hn. Richard


Gardner, Edward
Mawby, Ray
Woodhouse, Hn. Christopher


Gibson-Watt, David
Maxwell-Hyslop, R. J.
Woodnutt, Mark


Giles, Rear-Admiral Morgan
Maydon, Lt.-Cmdr. S. L. C.
Wylie, N. R.


Gilmour, Sir John (East Fife)
Meyer, Sir Anthony
Yates, William (The Wrekin)


Glover, Sir Douglas
Mills, Peter (Torrington)
Younger, G. K. H.


Glyn, Sir Richard
Mills, Stratton (Belfast, N.)



Goodhew, Victor
Miscampbell, Norman
TELLERS FOR THE AYES:


Gower, Raymond
Mitchell, David
Mr. Pym and Mr. R. W. Elliott.




NOES


Abse, Leo
Atkinson, Norman
Bellenger, Rt. Hn. F. J.


Albu, Austen
Bacon, Miss Alice
Bence, Cyril


Allaun, Frank (Salford, E.)
Bagier, Gordon A. T.
Benn, Rt. Hn. Anthony Wedgwood


Alldritt, W. H.
Barnett, J.
Binns, J.


Allen, Scholefield (Crewe)
Baxter, William
Bishop, E. S.


Armstrong, E.
Beaney, Alan
Blackburn, F.







Blenkinsop, Arthur
Houghton, Rt. Hn. Douglas
Palmer, Arthur


Boardman, H.
Howarth, Harry (Wellingborough)
Pannell, Rt. Hn. Charles


Boston, T. G.
Howarth, Robert L. (Bolton, E.)
Pargiter, G. A.


Bowden, Rt. Hn. H. W. (Leics S. W.)
Hoy, James
Pearson, Arthur (Pontypridd)


Bowles, Frank
Hughes, Cledwyn (Anglesey)
Pentland, Norman


Boyden, James
Hughes, Emrys (S. Ayrshire)
Popplewell, Ernest


Braddock, Mrs. E. M.
Hughes, Hector (Aberdeen, N.)
Prentice, R. E.


Bradley, Tom
Hunter, Adam (Dunfermline)
Probert, Arthur


Bray, Dr. Jeremy
Hunter, A. E. (Feltham)
Pursey, Cmdr. Harry


Broughton, Dr. A. D. D.
Irving, Sydney (Dartford)
Rankin, John


Brown, Rt. Hn. George (Belper)
Jackson, Colin
Redhead, Edward


Brown, Hugh D. (Glasgow, Provan)
Janner, Sir Barnett
Reynolds, G. W.


Brown, R. W. (Shoreditch &amp; Fbury)
Jeger, George (Goole)
Rhodes, Geoffrey


Buchan, Norman (Renfrewshire, W.)
Jeger, Mrs. Lena (H'b'n&amp;St.P'cras,S.)
Richard, Ivor


Buchanan, R.
Jenkins, Hugh (Putney)
Roberts, Albert (Normanton)


Butler, Herbert (Hackney, C.)
Jenkins, Rt. Hn. Roy (Stechford)
Roberts, Goronwy (Caernarvon)


Butler, Mrs. Joyce (Wood Green)
Jones, Dan (Burnley)
Robertson, John (Paisley)


Carmichael, Neil
Jones, J. Idwal (Wrexham)
Rodgers, William (Stockton)


Carter-Jones, L.
Jones, T. W. (Merioneth)
Rogers, George (Kensington, N.)


Castle, Rt. Hn. Barbara
Kelley, Richard
Rose, Paul B.


Coleman, Donald
Kenyon, Clifford
Ross, Rt. Hn. William


Conlan, Bernard
Lawson, George
Rowland, Christopher


Corbet, Mrs. Freda
Leadbitter, Ted
Sheldon, Robert


Crawshaw, R.
Ledger, Ron
Shinwell, Rt. Hn. E.


Cullen, Mrs. Alice
Lee, Rt. Hn. Frederick (Newton)
Shore, Peter (Stepney)


Dalyell, Tam
Lee, Miss Jennie (Cannock)
Short, Rt.Hn.E.(N'c'tle-on-Tyne,C.)


Davies, G. Elfed (Rhondda, E.)
Lever, Harold (Cheetham)
Short, Mrs. Renée (W'hampton, N. E.)


Davies, Harold (Leek)
Lever, L. M. (Ardwick)
Silkin, John (Deptford)


Davies, Ifor (Gower)
Lewis, Arthur (West Ham, N.)
Silkin, S. C. (Camberwell, Dulwich)


Davies, S. O. (Merthyr)
Lewis, Ron (Carlisle)
Silverman, Julius (Aston)


de Freitas, Sir Geoffrey
Lipton, Marcus
Silverman, Sydney (Nelson)


Delargy, Hugh
Lomas, Kenneth
Skeffington, Arthur


Dell, Edmund
Loughlin, Charles
Slater, Mrs. Harriet (Stoke, N.)


Dempsey, James
Mabon, Dr. J. Dickson
Slater, Joseph (Sedgefield)


Diamond, John
McBride, Neil
Small, William


Dodds, Norman
McCann, J.
Smith, Ellis (Stoke, S.)


Doig, Peter
MacColl, James
Snow, Julian


Donnelly, Desmond
MacDermot, Niall
Solomons, Henry


Driberg, Tom
McGuire, Michael
Spriggs, Leslie


Duffy, Dr. A. E. P.
McInnes, James
Stewart, Rt. Hn. Michael


Dunn, James A.
McKay, Mrs. Margaret
Stonehouse, John


Dunnett, Jack
MacKenzie, Gregor (Rutherglen)
Stones, William


Edelman, Maurice
Mackie, John (Enfield, E.)
Strauss, Rt. Hn. G. R. (Vauxhall)


Edwards, Rt. Hn. Ness (Caerphilly)
McLeavy, Frank
Swain, Thomas


Edwards, Robert (Bilston)
MacMillan, Malcolm
Symonds, J. B.


English, Michael
MacPherson, Malcolm
Taverne, Dick


Ennals, David
Mahon, Peter (Preston, S.)
Taylor, Bernard (Mansfield)


Ensor, David
Mahon, Simon (Bootle)
Thomas, George (Cardiff, W.)


Fernyhough, E.
Mallalieu,J.P.W.(Huddersfield,E.)
Thomas, Iorwwerth (Rhondda, W.)


Finch, Harold (Bedwelty)
Manuel, Archie
Thomson, George (Dundee, E.)


Fletcher, Sir Eric (Islington, E.)
Mapp, Charles
Thornton, Ernest


Fletcher, Ted (Darlington)
Marsh, Richard
Tinn, James


Fletcher, Raymond (Ilkeston)
Mellish, Robert
Tuck, Raphael


Floud, Bernard
Mendelson, J. J.
Urwin, T. W.


Foley, Maurice
Mikardo, Ian
Varley, Eric G.


Foot, Sir Dingle (Ipswich)
Millan, Bruce
Wainwright, Edwin


Foot, Michael (Ebbw Vale)
Miller, Dr. M. S.
Walden, Brian (All Saints)


Ford, Ben
Milne, Edward (Blyth)
Walker, Harold (Doncaster)


Galpern, Sir Myer
Molloy, William
Wallace, George


Garrett, W. E.
Monslow, Walter
Warbey, William


Ginsburg, David
Morris, Alfred (Wythenshawe)
Watkins, Tudor


Gregory, Arnold
Morris, Charles (Openshaw)
Weitzman, David


Grey Charles
Morris, John (Aberavon)
White, Mrs. Eirene


Griffiths, David (Rother Valley)
Murray, Albert
Whitlock, William


Griffiths, Rt. Hn. James (Llanelly)
Neal, Harold
Wilkins, W. A.


Hale, Leslie
Newens, Stan
Willey, Rt. Hn. Frederick


Hamilton, James (Bothwell)
Noel-Baker, Francis (Swindon)
Williams, Alan (Swansea, W.)


Hamilton, William (West Fife)
Noel-Baker, Rt.Hn.Philip(Derby,S.)
Williams, Mrs. Shirley (Hitchin)


Hamling, William (Woolwich, W.)
Norwood, Christopher
Williams, W. T. (Warrington)


Harrison, Walter (Wakefield)
Oakes, Gordon
Willis, George (Edinburgh, E.)


Harper, Joseph
O'Malley, Brain
Wilson, William (Coventry, S.)


Hattersley, Ray
Oram, Albert E. (E. Ham, S.)
Winterbottom, R. E.


Hayman, F. H.
Orbach, Maurice
Woodburn, Rt. Hn. A.


Hazell, Bert
Orme, Stanley
Woof, Robert


Heffer, Eric S.
Oswald, Thomas
Wyatt, Woodrow


Henderson, Rt. Hn. Arthur
Owen, Will
Zilliacus, K.


Herbison, Rt. Hn. Margaret
Padley, Walter



Hobden, Dennis (Brighton, K'town)
Page, Derek (King's Lynn)



Holman, Percy
Paget, R. T.
TELLERS FOR THE NOES:


Horner, John

Mr. Gourlay and Mr. Fitch.

Question proposed, That the Clause stand part of the Bill.

Sir Henry d'Avigdor-Goldsmid: I do not think it right that we should part with the Clause without expressing the very deep regret which we on this side feel that the Chancellor of the Exchequer and his colleagues have found it necessary to impose such a wasteful and destructive tax on our economy.
The effect of this increase in petrol duty has gone straight through our economy. The day after the duty was imposed road haulage rates went up by 2½ per cent. This was reflected and magnified in the extra cost of delivering building materials, and builders, who at this time are working at full pressure, have found no difficulty whatsoever in raising their prices yet again. I do not need to detail the effect which the increase in petrol duty is likely to have on the motor car industry on which, after all, we depend for so large a proportion of our export earnings.
This is the greatest discouragement to healthy industrial life in this country that the Chancellor of the Exchequer could conceivably have devised. Nor could he have chosen a worse time for imposing it. The economy is fully stretched and a relatively small increase in prices—not that this increase is very small—is reflected a hundred times in every part of our economy. I wonder who advises the right hon. Gentleman on matters like this. I hope that he does not feel that the gnomes of Zurich are pleased by this sort of economic ignorance. This is simply playing with our economy. It is a case if increasing a tax because of the arithmetic without regard to the consequences. This is a tax which can by no means help solve the main problem, which is that of increasing exports.
In view of this, I hope very much that my right hon. and hon. Friends will show their disgust for this tax and will divide against it.

Mr. F. A. Burden: I was interested in some of the remarks by the Chief Secretary when he suggested that it was right and proper that taxes imposed should be absorbed by industry. I think that it is germane at this point in the debate to point out to him that among the first people to increase their

prices as a result of the increased petrol tax are the nationalised road haulage concerns. In fact, my own company has a van service which is carried out by one of the nationalised road services, and as a result of this extra tax the cost to us of that service is to be increased by about £750 per annum. This is all for the delivery of essential supplies of consumer goods to the various shops.
I was also interested, in view of the fact that the nationalised industries are passing this charge on to the consumer, to have heard about a week ago the answer to a question about the possibility of the taxi trade having either to review its fares or of the possibility of a rebate, and, there again, it was pointed out by the Government spokesman that in fact the cost per mile as a result of the increased petrol tax would be very small, and that in any case the taxi drivers or the taxi companies had not so long ago received an increase in the fares. But of course, that was because of the cost of running those vehicles at that time, and since then this additional impost has been made by the action of the Government.
I would also draw the attention of the hon. Gentleman to the position of the farming industry. This is something of which I have not a very considerable knowledge, but it sticks out like a sore thumb. No industry in this country shows such a good degree of productivity as the farming industry, and I think that no other industry plays such a tremendous part in putting right our balance of payments. The tremendous increase in the quantity of home-grown food has made it possible for us to import less and less from abroad. This industry is vitally important not only from that point of view, but also because of its products. But let us be perfectly frank about this. I do not think that the hon. Gentleman would disagree with me that farm produce is the lifeline of this country and it is something on which every householder has to depend. Any increase in the price of farm produce must increase the cost of living.
I would ask the hon. Gentleman to consider very carefully whether there is not some way in which the farming industry can be eased of this additional cost, which will almost inevitably have


to be passed on to the consumer. It was very interesting to hear the hon. Gentleman, who is an accountant, standing at the Dispatch Box and saying that when taxes are imposed by his Government they must be absorbed and prices must not rise. But I wonder whether, as an accountant, when he looks at the books of the companies he is advising and sees inevitable increases in costs, he always gives them the advice he is now advocating.
I very much doubt whether the hon. Gentleman always tells the company that he is advising when its costs are increasing, "Do not pass them on. Just absorb them." I should be very interested to hear the hon. Gentleman's reply on this point. I know that he is in a difficult position because he is now defending Government action and that when he was advising professionally he was advising his clients.
All along the line we have had the suggestion that the taxes introduced by the present Government should be absorbed. I wonder whether the hon. Gentleman has looked back as far as the 1951 speech made by the late Mr. Hugh Gaitskell when he was Chancellor of the Exchequer, in which he said that increased taxes inevitably mean increased prices. It was on 11th March this year, as I pointed out yesterday, that his right hon. Friend the Chancellor of the Exchequer said exactly the same thing. If the hon. Gentleman will look up HANSARD of 11th March he will find that his right hon. Friend the Chancellor agreed from the Opposition Front Bench that increased taxes mean increased prices.
I think that of all the taxes that the Government have so far introduced this is the most inflationary, is bound to make itself felt throughout the whole economy and will undoubtedly lead very soon to an increase in prices over a wide range of goods.

5.30 p.m.

The Temporary Chairman (Commander Donaldson): Mr. Bennett, or should I say Sir Frederic?

Sir Frederic Bennett: Under either name, Commander Donaldson, I am grateful for being called.
Some few days ago we on these benches had quite a diatribe directed against us by the Chancellor of the Exchequer on the grounds that we have been representing the Budget as being inflationary. We were almost accused of deliberate misrepresentation which was having its effect on the stability of sterling. We were told that we were absolutely wrong to say that the Budget was inflationary and that to the Chancellor of the Exchequer himself it was so clearly not so.
This is the most astonishing accusation to make, because if hon. Members, either in opposition or in government, think that a Budget is inflationary, then it is their clear duty to say so. It is not a conspiracy against the stability of sterling to say it. There are plenty of arguments for saying that the Budget is inflationary to a very large extent. Had I been here yesterday I should have been quite prepared to argue that the increase in Income Tax with regard to savings is inflationary, but as that would be out of order to discuss today, I will deal with the petrol tax and, in due course, I will say something about the surcharge and the other inflationary items in the Budget.
The petrol tax must be accepted by the Chancellor as being inflationary. As some hon. Members have said, we all have experience in one field or another. Already, there are clear signs that where road transport of building materials is concerned it is not just a question of raising the price by 6d. It will raise the price of cement, bricks and everything else with its inevitable effect on the price of the house. One could go through every item to prove that this increase in the petrol tax will mean a much bigger rise in costs than adding it merely to just one item in the cost of living.
I hope, therefore, that when the time comes we shall vote against the Clause and place on record our firmly held view that this is one of the most, if not the most, inflationary items in a very inflationary Budget.

Sir Douglas Glover: I support what my hon. Friend the Member for Torquay (Sir F. Bennett) has just said, and I hope that we shall divide on the Clause. It is thoroughly inflationary. Not only is it inflationary, but it affects the most efficient organisations in the country. In my constituency


we have some of the most efficient farmers in Britain, who are very little affected by the Price Review. Therefore, their costs will not be taken into account in the Price Review.
Their products will not be affected by it. In the words of the right hon. Gentleman, they will be expected to absorb this increased charge, yet they are very great users indeed of mechanical equipment which is continuously being used in the production of the same crop. It will not mean just a first increase of, say, one-fifth of 1d. a mile as in road transport. It will represent a much bigger increase in agricultural production.
Then there is the horticultural industry, which is already facing today fierce competition from overseas. It is suffering from what those in the industry consider very inadequate protection, and yet now it is faced with an increased surcharge. That industry, again, is not covered by the Price Review. The inevitable effect will be that those in the industry will be forced to increase their prices, and when they do so it will be said that it is inflationary.
My hon. Friend knows a great deal about the consumer industry. The idea seems to be that the increased tax will be a once-for-all charge on the transport cost of goods. But very often goods are transported five or six times before they reach the actual point of sale, and the extra cost of all that to-ing and fro-ing will mean a very big increase in actual prices.
One of the stories that the Government are trying to get over is that these increases are necessary in order to find the money with which to pay the increased pensions. This is a story of a horse that will not run. The hon. Gentleman knows perfectly well that in his Budget statement the Chancellor made it quite clear that the on-cost, over and above the stamp, to cover the increased pension charges represents about £15 million in Exchequer grant and this tax alone is expected to bring in about £60 million or £70 million a year.
Even if we take the whole £15 million on this tax alone, it means that the party opposite is increasing direct taxation on the productive resources of the country by

£45 million or £50 million more than is needed for pensions. I think that this lie about the pension had better be nailed once and for all. It is a very misleading argument. These taxes are not being imposed in order to deal with the pensions. They are being imposed for an ideological reason, to try to create—[HON. MEMBERS: "No."] Let me say what I was going to say. The Chancellor said that we had created the climate. The hon. Gentleman, who has a lot of knowledge of these things and has made a similar speech to the one that I am making on so many occasions from this side of the Committee that he must almost know what comes in the next sentence, must know that anything that is a burden on the efficiency of the country is something which we do not want to create at this moment.
These measures will make it harder to export. The whole object of the Budget is supposed to be the exact opposite of what it is to achieve. I am certain that if the Chancellor, who has not been here very much during the Committee stage of the Bill, was able to speak with the knowledge that he has gained in recent days he would say that he wished he had not brought in these measures, but a lot of other taxes which would be much more justifiable and likely to produce the result that he wishes.

Mr. Donald Box: I join with hon. Friends on this side of the Committee who have expressed regret that the Government have found it necessary to increase the petrol tax by such a large amount. I think that the reactions of the motor industry were best summed up by a garage proprietor in my part of Wales, who, immediately following the announcement, published a notice in the South Wales Echo, the newspaper which circulates in my division and also, rather appropriately, in the division of the Chancellor of the Exchequer, which read:
 Sir Alec, Return immediately. All is forgiven.
Quite honestly, I cannot see for what the garage proprietor had to forgive my right hon. Friend the Leader of the Opposition, but I am quite certain that the public will not forgive the present Prime Minister and his right hon. Friend the Chancellor of the Exchequer when they face the extra charges, whether they


be for urban or long-distance bus fares, for road haulage or for rates which this Clause will involve, for they are all bound to add to the cost of living.
I was puzzled when, in the Chancellor's speech of 11th November, I came across this sentence:
 This increase in duty will exercise an appreciable and immediate disinflationary effect and will make an important contribution towards my general objective of preventing an increase in the pressure of demand."—[OFFICIAL REPORT, 11th November, 1964; Vol. 701, c. 1037.]
It seems to me that, above all else, this increase in petrol duty is bound to have a most inflationary effect on prices in this country. [HON. MEMBERS: "Rubbish."] Hon. Members opposite may think that that is rubbish, but they have been very unwilling to get to their feet to support what they say.
It is not in the least surprising that the Road Haulage Association immediately recommended that its members should bring about a rise in rates amounting to 2½ per cent. or 6d. in the £. I notice that, despite the Chancellor's assurances and those given by the Chief Secretary, the National Joint Council of Road Passenger Transport Workers, representing about 77,000 busmen, immediately expressed its deep concern at the rise.
We have been given some rather uncertain assurances about relief in respect of stage carriages. I welcome these assurances, though they were a little indecisive, for the effect in a city like Cardiff would have been dramatic had these extra charges gone on to the bus services. We are already losing about £100,000 a year, and the extra charges based on 6d. per gallon would have amounted to a further £18,000.
I shall not pursue the point, Commander Donaldson, because you would probably rule me out of order if I did, but I think it pertinent just to observe that, before the election, some right hon. and hon. Members opposite were anxious to point out how mean the Conservative Government were in not making fare concessions to pensioners. I content myself with saying that, in the discussions on relief from this tax, I have not noticed any suggestions from the benches opposite that there should be any concessions for pensioners in the matter of fares.
As is well known, a number of rural bus services are subsidised out of the more profitable urban services. Despite the Government's assurances about stage carriage relief, I was not surprised to see that at least three companies opera, ting rural bus services in Wales had applied for an increase in their cheap day fares. Incidentally, whenever the subject of rural transport has been discussed in the past, it has always brought a great deal of outcry from hon. Members representing rural constituencies in Wales.
When rail closures were proposed in their areas, they complained, they rampaged, they arranged marches and meetings of protest. Yet today, in an important debate when we are discussing this very matter which might have an effect on rural transport fares, I see not one Welsh Member representing a rural constituency present. This is what happens when an important issue is discussed. They are conspicuous by their absence.
There is no doubt that the cost increase for industry will be considerable. Hardly anything will escape. Most important to the area which I represent will be the added cost for the steel industry. Already, the Steel Company of Wales has reported that a material increase in costs is bound to result, and this, of course, will have to be passed on down the line to the customer, making us less competitive in the future.
I find it difficult, therefore, to see how the rise can do other than increase the cost of living, increase the costs of production and reduce our competitiveness, particularly the competitiveness of our road haulage industry as against the railways, and I hope, therefore, that my right hon. and hon. Friend will vote against the Clause.

5.45 p.m.

Mr. Frederic Harris: I may be accused of repetition, but, looking back over the past 17 years, I emphasise that I have opposed every increase in the petrol duty, whether it has come from a Conservative or a Labour Government. The present Minister of Works has often referred in the House to some of my past speeches on the subject.
I apologise to the Committee for my loss of voice and I shall not detain it long. I wish merely to emphasise two


points which I have stressed before. The trouble is that the increase in petrol duty is far too easy for a Chancellor to use. It gives him a quick answer to his problems. The second point—I put this from a business point of view, and the Chief Secretary will know about it from his own commercial and professional experience—is that, regrettably, when the petrol duty is increased, every industry invariably has to balance off its figures by putting on an increase which is slightly above the actual cost of the tax itself. In the main, this is true, and it aggravates the increased costs about which we are all disturbed and to which we refer quite rightly as having a considerable inflationary tendency.
There can be no dodging the fact that, regrettably, industry cannot put on just the equivalent of the increase in the petrol duty. Unfortunately, the levelling off means much higher increases in costs and, therefore, the effect is even more serious.
On this occasion, as on previous occasions, I strongly oppose the increase in the petrol duty.

Mr. Diamond: I am sure that I speak for the whole Committee when I say how sorry we are that the hon. Member for Croydon, North-West (Mr. Frederic Harris) has a little difficulty in speaking. We hope that he will rest his voice adequately, because we should hate his trouble to go to unnecessary lengths. We recognise, also, that he has been consistent, always taking the view, which he has just expressed, each time the petrol duty was raised by his right hon. and hon. Friends, which has been on more than one occasion.
To come straight to the point which the hon. Gentleman and several of his hon. Friends made, that this increase in the petrol duty means either at least an equivalent increase in the sale price of goods, or, as he said, a more than equivalent increase because of the process of rounding off and the habit which people have of adding on a bit more than the costs which they have in fact incurred, I can only repeat what I said yesterday.
The first thing which we must all understand if we are to get the country out of the situation in which it still is is that we must be more competitive in

our export prices. We must be much more competitive in our attitudes, and, to be more competitive, we must be much more efficient in all our operations. This means absorbing price increases and not simply idly or lazily passing them straight on and letting the wretched customer carry them.

Mr. Burden: rose—

Mr. Diamond: I listened very carefully to the hon. Gentleman and I shall give way with pleasure shortly. This is the Committee stage and he may intervene as often as he feels compelled. I should like to complete this point and make it absolutely clear.
This debate is not about an increase in the cost of living of one-fifth of a point. It is not about an increase in the mileage charge of the average vehicle of one-fifth of 1d. a mile. It is about the totality of the increase in this tax, about £93 million in a full year. It is a substantial producer of revenue, the total in a full year at the new rate being more than £700 million a year. The real question is: was it necessary for this impost to be added on to meet the economic situation, and, it having been added on, what is the best way of dealing with it?
My right hon. Friend explained in his Budget speech and on Second Reading why it was necessary. I have referred to this matter myself. As is well known, the situation when we took office was such that we were compelled, as a result of the balance of payments position, to reduce imports, and we took steps to do so. If one reduces imports, one increases the pressure which purchasing power exerts on a reduced quantity of goods. In order to avoid that pressure, one had to exercise a disinflationary power, and the best way to do that was some kind of tax which would be broadly spread, which would have the least damaging effects and which would not prejudice exports at all.
Some hon. Members opposite, notably the hon. Member for Ormskirk (Sir D. Glover), have said that this tax would make it harder to export. Taken in conjunction with the other provisions in this very Bill for the export rebate, it will not have any effect whatever on export prices. Therefore, it does not make it harder to export.

Mr. Burden: The hon. Gentleman has come back to the point about absorbing the tax. In the circumstances, would it not be a good thing if the Government set an example by sending a directive to the national road transport organisation telling it to absorb the cost of the increased petrol duty rather than pass it on in increased costs to consumers through carriage charges?

Mr. Diamond: The Government are setting an example by having a stern review of expenditure. This is being conducted at the moment. When the conclusions of it are put before the House, I hope that we shall have the full support of the hon. Member for Gillingham (Mr. Burden) and of all his right hon. and hon. Friends in any reduction of expenditure which may be necessary. This is the way to set the example.
In reply to what the hon. Member for Croydon, North-West put to me in his reference to my personal experience, I am glad to say that I know of no board of self-respecting directors who, when faced with the problem of increased charges coming from wage increases, increases in direct taxation or in any other way, do not first say to themselves, "Here is an increase in our charges. How are we to absorb it and deal with it without making our goods less competitive by putting up the price?". That is the first reaction of any worthwhile business owner or business manager in this country.

Sir Stephen McAdden: The hon. Gentleman implies a challenge to us to show the contrary of what he has just said. What about the Government's own attitude in the matter? Has he never heard of the British Transport Commission, which regularly asks for fare increases as soon as wages rise?

Mr. Diamond: The hon. Member for Croydon, North-West asked me about one's approach to this situation. I am quite sure that it would be wrong for anyone on either side of the Committee to accept it as automatic or anything approaching automatic that, faced with an increase, especially such a minimal increase as this is likely to be percentage-wise, the first reaction of any business is to pass it on in terms of prices. We shall never make progress if we continue on that basis.

Mr. John Biffen: I accept the hon. Gentleman's point that it is vital to have the closest attention to costs at all times if British industry is to remain competitive. The point I have to put to him is somewhat different. He said that the main purpose of this tax was to act as a kind of regulator of pressure of demand. It is the arithmetic of that which interests me, because a great deal of this increased tax will fall as an industrial cost and, if it is absorbed, it must reduce the effect of the tax as a regulator on the pressure of demand. What does he think is the actual amount out of the £93 million which will fall on consumption after the amount of cost absorption which he would like to see has taken place?

Mr. Diamond: If it is thought that that is within the scope of this Clause I am only too glad to answer the question. We should not get bedded down with too much detail about the comparative cost of petrol in Belgium, or elsewhere, but we should deal with the vital questions which have been raised by hon. Members who have intervened in the debate. I repeat what the Chancellor said, that the purpose of this tax is to reduce pressure. We can do that in one of two ways. Obviously, if it is all passed on in terms of increased prices the result is a lowering in demand for an equivalent amount of goods. If, on the other hand, it is all absorbed through greater efficiency we get an additional amount of goods for the same purchasing power.
In either event purchasing power and goods available are kept level, and that is the purpose. It can be done in one of two ways, the inefficient way of passing it on and the efficient way of absorbing it, and either way it will have a disinflationary effect on imports. The Committee should recognise this situation and give full support to the Clause.
Most of the contents of the Clause have already been discussed in debates on Amendments, but there is one thing I should add as it has not emerged. The Clause, which is a consolidating Clause, in terms of machinery represents that so far as excise duty as opposed to customs duty is concerned, it removes the preference which exists as between duty on home-produced and imported oil as from 1st January, in conformity with our obligations under E.F.T.A., repeating a


provision in the earlier Finance Act which right hon. Members opposite produced this year.
The hon. Member for Cardiff, North (Mr. Box) asked why my hon. Friends were not continually asking questions about reduced travel costs for pensioners. The reason why they have not been doing that is that we have already dealt with a Bill concerned with that subject which has gone from this House to another place. I do not know whether he was in this House at the time, but he has made the continual accusation about my hon. Friends not being present. The figures from the Division Lobbies which you, Commander Donaldson—and I trust your accuracy—have read, show that my hon. Friends are present. They seem to be present in greater numbers than hon. Members opposite. The reason why my hon. Friends are not raising questions about the Clause is that they are satisfied with its contents and give it their silent approval.

Mr. Box: There are many more hon. Members opposite present now than there were when we were discussing Amendments to the Clause. It is true that I have been away on a Parliamentary delegation for some weeks. I was unaware of the fact that the legislation referred to had gone through this House. If my remarks were incorrect, I withdraw them.

Mr. Diamond: Nothing could be more courteous and I am grateful to the hon. Member.
The hon. Member for Torquay (Sir F. Bennett)—[An HON. MEMBER: "He has skedaddled."]—raised a question about transport of bricks and concrete. It is true that at the extreme point where a very heavy load of goods which are inexpensive has to be carried we get a higher proportion resulting from the petrol charge than at the other extreme where there are many valuable lightweight goods to transport. But that does not alter the basic argument that the impact is very slight and it is evenly spread. It is introduced for reasons which are absolutely unavoidable to help our competitive position.
For these reasons, I ask hon. Members to support the Clause.

6.0 p.m.

Mr. William Clark: Yesterday, we had a debate on Clause 1 and there were substantial arguments against its being included in the Bill. I think there are similar arguments against this Clause. We do not think that either the Income Tax increase or the petrol tax increase is necessary.
The burden of the argument of the Chief Secretary was that the increase in petrol tax is to help our balance of payments. The product of this extra 6d. per gallon is to be £93 million. When we break that down we find that approximately £60 million, two-thirds, will fall on industry. if it falls on industry it will be a chargeable expense for tax purposes. If it is said to be disinflationary it should be seen that the Government are not giving up £93 million, but about £30 million. When they came into office the party opposite made great play about modernising Britain, reducing costs, and so on. This is a peculiar way of reducing costs by immediately slapping at least £60 million cost on to industry.
We have maintained throughout that this Budget is an inflationary Budget, but the Chief Secretary seeks to convince us that it is a disinflationary Budget. He would agree with my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that we want more exports. Is the increased petrol cost to increase transport costs from factory to port, or not? Surely it will increase the cost of exports. Conversely, if imports are moved by road from port to distributing centre, wherever it may be, as my hon. Friend the Member for Gillingham (Mr. Burden) said, this will increase the cost of transport.
I should have thought that the major portion of this £93 million must (a) affect industry and (b) affect the cost of living. The Chief Secretary proved to me that, despite the opposition of hon. Members opposite to the stop-go policy which is derided, he was expounding exactly the same policy.

Mr. Diamond: I interrupt only on a point of fact. The simple fact is that the export rebate is calculated on a number of things, one of which is the cost of the petrol duty entering into the goods exported.

Mr. Burden: Oh, no.

Mr. Diamond: I repeat it. It is quite wrong to say that this, in any case, prejudices the export of goods.

Mr. Clark: Even accepting that, the Chief Secretary, in his winding-up remarks, said that any increase in the cost of petrol for industry should be absorbed and that, consequently, we must become more competitive. It seems extraordinary to slap on a charge on goods and tell the industrialist that he must be competitive and absorb the charge. Even if he does so, that does not make him more competitive for the cost of the goods will not be reduced.
What were the Socialist boasts during and even since the election, both in the Queen's Speech and in the White Paper on maintaining stable prices? Surely the Chief Secretary and his hon. Friends—and, I am certain, my hon. Friends—must agree that this tax must increase the cost of living. There must be many red faces among the Socialists. I am sure that millions of car owners will be particularly bitter about this Socialist Government who, having got into office, not only increase the Income Tax by 6d. in the £, put a poll tax on National Insurance of 2s. irrespective of income, and penalise the small motorist to the extent of 6d. per gallon of petrol.
Many of my hon. Friends have given reasons why we should resist the Clause. My hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) and my hon. Friend the Member for Ormskirk (Sir D. Glover) both spoke of the effect on agriculture. There is no point in recanvassing the arguments in that respect. My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), in the previous debate, spoke about transport, especially in rural areas. If the Government press this imposition they must apologise to the electorate for having given the electorate the impression that the advent of a Socialist Government did not mean increased taxation.
If hon. Members opposite want to be politically straight about this, they should apologise for giving the impression that there would be no general increase in taxation. Our greatest criticism of this Budget, and this Clause in particular, is that the Chancellor did not think through his proposals. This tax must

affect our export effort and make us less competitive. For those reasons, I hope that my hon. and right hon. Friends will vote against this Clause in the Lobby.

Mr. Burden: I intervene very shortly because the Chief Secretary made an important statement and this should be pointed out. He stated that when there is a rebate of the surcharge this increased duty on goods brought in under the 15 per cent. would have the increased cost of petrol included in that rebate. I and many people who have been re-exporting for many years have always found that the amount of rebate we got was the amount shown and assessed by the Customs officials on the invoices only. There was no question of any addition of any cost on transport after the goods had been brought to this country.
I hope that the Chief Secretary will make this point very clear, because it was a statement which I am sure many people will be glad to hear, that when the rebate on the surcharge is made it will also include a token sum to take care of the cost after the goods have been imported and not as shown on the invoices.

Mr. Diamond: I am grateful for the opportunity of making clear what I thought was clear and what it is my duty to make clear to the hon. Member and to the country. He has been referring to past experience of existing legislation, but what I have referred to is new provisions in new legislation which the Committee will be debating on a subsequent Clause. Those provisions provide for a new export rebate. One of the elements is the cost of petrol duty. To the extent that petrol duty goes up or down so would the export rebate be varied. I hope that I have made it clear that the hon. Member was referring to a different thing. Under the provisions which the Committee will debate as soon as may be possible, the sooner the better, he will see that what I have said is quite right.

Mr. Burden: I am grateful to the hon. Gentleman.

Mr. Geoffrey Lloyd: Commending the Clause to the Committee, the Chief Secretary has again delivered a lecture to the industrialists of the country. He did it yesterday in our debate on the earlier Clause and he has done it again


today. He says that they have to absorb price increases and become more efficient and more competitive.
I wonder whether the right hon. Gentleman appreciates the badness of his psychology and how much his lectures will be resented and rejected by industrialists and practical businessmen all over the country. It is bad enough for industrialists to receive constant exhortation from Ministers, but many of them will take the view that to have their costs increased and then to receive a lecture from the Minister responsible is too much.
Before we part with the Clause, I must make a strong protest on behalf of the Birmingham and Midland industrial community against the increase in the tax on petrol. We in the Midlands are the centre of the motor car industry and this increase in the cost of motoring is bound to be some kind of check to the expansion of our industry. It is not possible exactly to quantify this effect, but the fact that it constitutes an obstacle to the further rapid expansion of motoring, and therefore of motor manufacturing, is undoubted.
We in the Midlands largely make our living from this industry. It is not only a question of the great motor car companies which we all know, for the component manufacturers are tremendously strongly represented in the Midlands and every year hundreds of millions of pounds worth of orders come into Birmingham and the rest of the Midlands for all the parts which go into motor cars. This production must be checked to some extent by any check in the demand resulting from an increase in the cost of petrol.
It is sometimes said that almost every factory in Birmingham now makes some parts of a motor car. That is an exaggeration, but it is an indication of the importance of this work to the area. Under the Conservative Government, the motor car industry was going ahead well and in the Midlands we were very prosperous.

That brings me to my second grievance on behalf of the Midlands, not as manufacturers but as consumers. It is that, because of the very prosperity of the Midlands area, largely due to its great part in motor car manufacture, we have been the part of the country where new motor car owners have been coming along faster than probably anywhere else. It is commonplace that car workers should have their own cars and we are all very pleased about that, but it is also true that almost any young man in Birmingham who is asked how he is getting on is almost certain to say that he does not have a car yet. Anything which makes motoring more expensive will be an obstacle to the ambition of all our young people to own a motor car, which is not only a part of the Midland's prosperity, but also the legitimate ambition of our young Midland workers.

In the Midlands there is a suspicion that the Government are hostile to the Midlands area. We have already heard that the President of the Board of Trade is to be much tougher about industrial development certificates for our area and in this Clause the Government are striking a blow at the industry which is the fundamental basis of our prosperity.

6.15 p.m.

Mr. Joel Barnett: I want to refute one assertion of the hon. Member for Nottingham, South (Mr. William Clark). The hon. Gentleman should have known better. He said that of the total involved in this tax, about £90 million, some £60 million would fall on industry and would then be mitigated by the disinflationary effect. He should know that companies whose years end up to and before 5th April will not have their tax payable until January, 1966, while companies whose years end later will not be paying tax until January, 1967, so that the disinflationary effect will clearly not apply now.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes, 243, Noes, 218.

Division No. 18.]
AYES
[6.16 p.m.


Abse, Leo
Atkinson, Norman
Bellenger, Rt. Hon. F. J.


Albu, Austen
Bacon, Miss Alice
Bence, Cyril


Allaun, Frank (Salford, E.)
Bagier, Gordon A. T.
Benn, Rt. Hon. Anthony Wedgwood


Alldritt, W. H.
Barnett, Joel
Bennett, J. (Glasgow, Bridgeton)


Allen Scholefield (Crewe)
Baxter, William
Binns, John


Armstrong, Ernest
Beaney, Alan
Bishop, E. S.




Blackburn, F.
Herbison, Rt. Hn. Margaret
Padley, Walter


Blenkinsop, Arthur
Hobden, Dennis (Brighton, K'town)
Page, Derek (King's Lynn)


Boardman, H.
Holman, Percy
Paget, R. T.


Boston, T. G.
Horner, John
Palmer, Arthur


Bowden, Rt. Hn. H. W. (Leics S. W.)
Houghton, Rt. Hn. Douglas
Pannell, Rt. Hn. Charles


Bowles, Frank
Howarth, Harry (Wellingborough)
Pargiter, G. A.


Boyden, James
Howarth, Robert L. (Bolton, E.)
Pearson, Arthur (Pontypridd)


Braddock, Mrs. E. M.
Hoy, James
Pentland, Norman


Bradley, Tom
Hughes, Cledwyn (Anglesey)
Popplewell, Ernest


Bray, Dr. Jeremy
Hughes, Emrys (S. Ayrshire)
Prentice, R. E.


Broughton, Dr. A. D. D.
Hughes, Hector (Aberdeen, N.)
Probert, Arthur


Brown, Hugh D. (Glasgow, Provan)
Hunter, Adam (Dunfermline)
Pursey, Cmdr. Harry


Brown, R. W. (Shoreditch &amp; Fbury)
Hunter, A. E. (Feltham)
Rankin, John


Buchan, Norman (Renfrewshire, W.)
Irving, Sydney (Dartford)
Redhead, Edward


Buchanan, Richard (Gl'sg'w,Spr'burn)
Jackson, Colin
Reynolds, Gerald


Butler, Herbert (Hackney, C.)
Jeger, George (Goole)
Rhodes, Geoffrey


Butler, Mrs. Joyce (Wood Green)
Jeger,Mrs.Lena(H'b'n&amp;St.P'cras,S.)
Richard, Ivor


Carmichael, Neil
Jenkins, Hugh (Putney)
Roberts, Albert (Normanton)


Carter-Jones, Lewis
Jenkins, Rt. Hn. Roy (Stechford)
Roberts, Goronwy (Caernarvon)


Castle, Rt. Hn. Barbara
Jones, Dan (Burnley)
Robertson, John (Paisley)


Coleman, Donald
Jones, J. Idwal (Wrexham)
Rodgers, William (Stockton)


Corbet, Mrs. Freda
Jones, T. W. (Merioneth)
Rose, Paul B.


Crawshaw, Richard
Kelley, Richard
Ross, Rt. Hn. William


Cullen, Mrs. Alice
Kenyon, Clifford
Rowland, Christopher


Dalyell, Tam
Lawson, George
Sheldon, Robert


Davies, G. Elfed (Rhondda, E.)
Leadbitter, Ted
Shinwell, Rt. Hn. E.


Davies, Harold (Leek)
Ledger, Ron
Shore, Peter (Stepney)


Davies, Ifor (Gower)
Lee, Rt. Hn. Frederick (Newton)
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)


Davies, S. O. (Merthyr)
Lee, Miss Jennie (Cannock)
Short, Mrs. Renée (W'hampton. N. E.)


de Freitas, Sir Geoffrey
Lever, Harold (Cheetham)
Silkin, John (Deptford)


Delargy, Hugh
Lever, L. M. (Ardwick)
Silkin, S. C. (Camberwell, Dulwich)


Dell, Edmund
Lewis, Ron (Carlisle)
Silverman, Julius (Aston)


Dempsey, James
Lipton, Marcus
Silverman, Sydney (Nelson)


Diamond, John
Lomas, Kenneth
Skeffington, Arthur


Dodds, Norman
Loughlin, Charles
Slater, Joseph (Sedgefield)


Doig, Peter
Mabon, Dr. J. Dickson
Small, William


Donnelly, Desmond
McBride, Neil
Smith, Ellis (Stoke, S.)


Driberg, Tom
MacDermot, Niall
Snow, Julian


Duffy, Dr. A. E. P.
McGuire, Michael
Solomons, Henry


Dunn, James A. (L'pool, Kirkdale)
McInnes, James
Spriggs, Leslie


Dunnett, Jack (Nottingh'm, Central)
McKay, Mrs. Margaret
Stonehouse, John


Edwards, Rt. Hn. Ness (Caerphilly)
MacKenzie, Gregor (Rutherglen)
Stones, William


Edwards, Robert (Bilston)
McLeavy, Frank
Summerskill, Dr. Shirley


English, Michael
MacMillan, Malcolm
Swain, Thomas


Ennals, David
MacPherson, Malcolm
Symonds, J. B.


Ensor, David
Mahon, Peter (Preston, S.)
Taylor, Bernard (Mansfield)


Fernyhough, E.
Mahon, Simon (Bootle)
Thomas, George (Cardiff, W.)


Finch, Harold
Mallalieu, J. P. W. (Huddersfield, E.)
Thomas, Iorwerth (Rhondda, W.)


Fitch, Alan
Manuel, Archie
Thomson, George (Dundee, E.)


Fletcher, Sir Eric (Islington, E.)
Mapp, Charles
Thornton, Ernest


Fletcher, Ted (Darlington)
Marsh, Richard
Tinn, James


Fletcher, Raymond (Ilkeston)
Mellish, Robert
Tuck, Raphael


Floud, Bernard
Mendelson, J. J.
Urwin, T. W.


Foley, Maurice
Mikardo, Ian
Varley, Eric G.


Foot, Sir Dingle (Ipswich)
Millan, Bruce
Walden, Brian (All Saints)


Foot, Michael (Ebbw Vale)
Miller, Dr. M. S.
Walker, Harold (Doncaster)


Ford, Ben
Milne, Edward (Blythe)
Wallace, George


Galpern, Sir Myer
Molloy, William
Warbey, William


Garrett, W. E.
Monslow, Walter
Watkins, Tudor


Garrow, A.
Morris, Alfred (Wythenshawe)
Weitzman, David


Ginsburg, David
Morris, Charles (Openshaw)
Whitlock, William


Gourlay, Harry
Morris, John (Aberavon)
Wilkins, W. A.


Gregory, Arnold
Murray, Albert
Willey, Rt. Hn. Frederick


Grey, Charles
Neal, Harold
Williams, Alan (Swansea, W.)


Griffiths, David (Rother Valley)
Newens, Stan
Williams, Mrs. Shirley (Hitchin)


Griffiths, Rt. Hn. James (Llanelly)
Noel-Baker, Francis (Swindon)
Williams, W. T. (Warrington)


Hale, Leslie
Noel-Baker,Rt.Hn.Philip(Derby,S.)
Willis, George (Edinburgh, E.)


Hamilton, James (Bothwell)
Norwood, Christopher
Wilson, William (Coventry, S.)


Hamilton, William (West Fife)
Oakes, Gordon
Winterbottom, R. E.


Hamling, William (Woolwich, W.)
Ogden, Eric
Woodburn, Rt. Hn. A.


Harper, Joseph
O'Malley, Brian
Woof, Robert


Harrison, Walter (Wakefield)
Oram, Albert E. (E. Ham S.)
Wyatt, Woodrow


Hayman, F. H.
Orbach, Maurice
Zilliacus, K.


Hazell, Bert
Orme, Stanley



Heffer, Eric S.
Oswald, Thomas
TELLERS FOR THE AYES:


Henderson, Rt. Hn. Arthur
Owen, Will
Mr. McCann and Mrs. Slater.




NOES


Agnew, Commander Sir Peter
Atkins, Humphrey
Bennett, F. M. (Torquay)


Alison, Michael (Barkston Ash)
Awdry, Daniel
Berkeley, Humphry


Allason, James (Hemel Hempstead)
Baker, W. H. K.
Berry, Hn. Anthony


Amery, Rt. Hon. Julian
Barlow, Sir John
Bessell, Peter


Astor, John
Batsford, Brian
Biffen, John







Biggs-Davison, John
Hall-Davis, A. G. F. (Morecambe)
More, Jasper


Bingham, R. M.
Hamilton, Marquess of (Fermanagh)
Morgan, W. G.


Birch, Rt. Hn. Nigel
Harris, Frederic (Croydon, N. W.)
Morrison, Charles (Devizes)


Black, Sir Cyril
Harris, Reader (Heston)
Mott-Radclyffe, Sir Charles


Blaker, Peter
Harrison, Col. Sir Harwood (Eye)
Murton, Oscar


Bowen, Roderic (Cardigan)
Hawkins, Paul
Nicholls, Sir Harmar


Box, Donald
Hay, John
Noble, Rt. Hn. Michael


Boyd-Carpenter, Rt. Hn. J.
Heald, Rt. Hn. Sir Lionel
Nugent, Rt. Hn. Sir Richard


Braine, Bernard
Heath, Rt. Hn. Edward
Onslow, Cranley


Brinton, Sir Tatton
Hendry, Forbes
Orr, Capt. L. P. S.


Bromley-Davenport,Lt.-Col.Sir Walter
Higgins, Terence L.
Orr-Ewing, Sir Ian


Brooke, Rt. Hn. Henry
Hiley, Joseph
Osborn, John (Hallam)


Brown, Sir Edward (Bath)
Hill, J. E. B. (S. Norfolk)
Page, John (Harrow, W.)


Bruce-Gardyne, J.
Hirst, Geoffrey
Page, R. Graham (Crosby)


Buchanan-Smith, Alick
Hornby, Richard
Percival, Ian


Buck, Antony
Hornsby-Smith, Rt. Hn. Dame P.
Pickthorn, Sir Kenneth


Bullus, Wing Commander Eric
Howard, Hn. G. R. (St. Ives)
Pike, Miss Mervyn


Burden, F. A.
Howe, Geoffrey (Bebington)
Pitt, Dame Edith


Butcher, Sir Herbert
Hunt, John (Bromley)
Pounder, Rafton


Campbell, Gordon
Hutchison, Michael Clark
Powell, Rt. Hn. J. Enoch


Carlisle, Mark
Irvine, Bryant Godman (Rye)
Prior, J. M. L.


Carr, Rt. Hn. Robert
Jenkin, Patrick (Woodford)
Pym, Francis


Gary, Sir Robert
Jennings, J. C.
Quennell, Miss J. M.


Channon, H. P. G.
Johnston, Russell (Inverness)
Ramsden, Rt. Hn. James


Chataway, Christopher
Jones, Arthur (Northants, S.)
Rawlinson, Rt. Hn. Sir Peter


Chichester-Clark, R.
Jopling, Michael
Redmayne, Rt. Hn. Martin


Clark, William (Nottingham, S.)
Joseph, Rt. Hn. Sir Keith
Rees-Davies, W. R. (Isle of Thanet)


Cooke, Robert
Kaberry, Sir Donald
Renton, Rt. Hn. David


Cooper, A. E.
Kerby, Capt. Henry
Ridsdale, Julian


Cooper-Key, Sir Neill
Kerr, Sir Hamilton (Cambridge)
Roberts, Sir Peter (Heeley)


Costain, A. P.
Kershaw, Anthony
Rodgers, Sir John (Sevenoaks)


Courtney, Cdr. Anthony
Kilfedder, James A.
Roots, William


Craddock, Sir Beresford (Spelthorne)
Kimball, Marcus
Scott-Hopkins, James


Cunningham, Sir Knox
King, Evelyn (Dorset, S.)
Sharples, Richard


Curran, Charles
Kitson, Timothy
Sinclair, Sir George


Currie, G. B. H.
Lagden, Godfrey
Spearman, Sir Alexander


Dalkeith, Earl of
Lambton, Viscount
Stainton, Keith


Davies, Dr, Wyndham (Perry Barr)
Langford-Holt, Sir John
Stanley, Hn. Richard


d'Avigdor-Goldsmid, Sir Henry
Legge-Bourke, Sir Harry
Summers, Sir Spencer


Dean, Paul
Litchfleld, Capt. John
Talbot, John E.


Deedes, Rt. Hn. W. F.
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)
Taylor, Edward M. (G'gow, Cathcart)


Digby, Simon Wingfield
Lloyd, Ian (P'tsm'th, Langstone)
Taylor, Frank (Moss Side)


Dodds-Parker, Douglas
Lloyd, Rt. Hon. Selwyn (Wirral)
Thatcher, Mrs. Margaret


Doughty, Charles
Longbottom, Charles
Thomas, Sir Leslie (Canterbury)


Drayson, G. B.
Loveys, Walter H.
Thompson, Sir Richard (Croydon, S.)


du Cann, Edward
Lubbock, Eric
Thorpe, Jeremy


Eden, Sir John
Lucas, Sir Jocelyn (Portsmouth, S.)
Tilney, John (Wavertree)


Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Lucas-Tooth, Sir Hugh (Hendon, S.)
Turton, Rt. Hn. R. H.


Emery, Peter
McAdden, Sir Stephen
Tweedsmuir, Lady


Fell, Anthony
Mackenzie, Alasdair (Ross &amp; Crom'ty)
van Straubenzee, W. R.


Fisher, Nigel
Mackie, George Y. (C'ness &amp; S'land)
Walder, David (High Peak)


Fletcher-Cooke, Charles (Darwen)
McLaren, Martin
Walker, Peter (Worcester)


Forrest, George
McMaster, Stanley
Walters, Denis


Foster, Sir John
McNair-Wilson, Patrick
Ward, Dame Irene


Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)
Maginnis, John E.
Whitelaw, William


Gammans, Lady
Maitland, Sir John
Williams, Sir Rolf Dudley (Exeter)


Gardner, Edward
Marten, Neil
Wills, Sir Gerald (Bridgwater)


Gibson-Watt, David
Mathew, Robert
Wilson, Geoffrey (Truro)


Giles, Rear-Admiral Morgan
Maude, Angus E. U.
Wolrige-Gordon, Patrick


Gilmour, Sir John (East Fife)
Maulding, Rt. Hn. Reginald
Wood, Rt. Hn. Richard


Glyn, Sir Richard
Mawby, Ray
Woodhouse, Hn. Christopher


Goodhew, Victor
Maxwell-Hyslop, R. J. (Tiverton)
Woodnutt, Mark


Gower, Raymond
Maydon, Lt.-Cmdr. S. L. C.
Wylie, N. R.


Grant, Anthony
Meyer, Sir Anthony
Yates, William (The Wrekin)


Grant-Ferris, R. (Nantwich)
Mills, Peter (Torrington)
Younger, Hn. George


Griffiths, Eldon (Bury St. Edmunds)
Mills, Stratton (Belfast, N.)



Griffiths, Peter (Smethwick)
Miscampbell, Norman
TELLERS FOR THE NOES:


Grimond, Rt. Hn. J.
Mitchell, David
Mr. MacArthur and Mr. Ian Fraser.


Hall, John (Wycombe)
Monro, Hector

Clause 3.—(CHARGE OF TEMPORARY CUSTOMS DUTY.)

Mr. Edward Heath: I beg to move Amendment No. 15, in page 4, line 29, to leave out "November" and to insert "March".
I understand that this Amendment is being taken in conjunction with Amendments Nos. 16, 17 and 18, in page 4, line

29, leave out "November" and insert "May"; in line 34, leave out "November" and insert "March 2"; in line 34, leave out "1966" and insert "1965".

The Temporary Chairman: I should have said so in the first place.

Mr. Heath: Thank you very much, Commander Donaldson.
The Committee now moves to Clause 3 which deals with the imposition of the temporary surcharge. This Amendment, as, I think, the Committee will agree, is important, dealing with the dating of the surcharges. Nevertheless, it is an Amendment the point of which can be made to the Committee comparatively briefly.
What does the Amendment do? It limits the period in which the surcharges will run to the end of next March, 1965, instead of to the end of next November, 1965. In other words, a period of just under six months from the imposition of the surcharges would be the limit for their first period. Under subsection (12) the Government would be able, by securing an affirmative Resolution, to continue the surcharges. By Amendment No. 17, this would be limited to a period of a year, but would give them the opportunity of continuing the surcharges till March, 1966. I think, therefore, that these two Amendments ought to be considered together; at any rate, the latter should be borne in mind. I think that the purpose of the Amendment is quite clear, but I should like to say a word about its importance.
6.30 p.m.
First, it gives an opportunity to the Minister who is to reply, perhaps the Minister of State, Board of Trade, to explain exactly what the intentions of the Government are towards these surcharges. It is of great importance that this Committee of the House of Commons should be told exactly what the Government's intentions are. There have been a very large number of indications in capitals of other countries of various hints given to other Governments about the length of time for which the surcharges are to run.
It was even said that in the E.F.T.A. meeting certain undertakings were given to the member Governments about the length of time for the surcharges. We all recall that the President of the Board of Trade, before his flight across the Soviet Union to Peking, stopped at Copenhagen, whence he was reported as saying that a special arrangement would be made for E.F.T.A. by a more rapid deduction from E.F.T.A. countries, to offset the surcharges. This was a very inept move, because immediately it led

to the accusation of discrimination. It was followed by indications that E.F.T.A., at any rate, had been told the length of time the surcharges were going to run. Perhaps the Minister of State could tell us quite clearly what the intentions of the Government are.
The Chancellor of the Exchequer himself, during Second Reading of the Bill, said:
 While it is not possible to fix precise dates for reducing or eliminating the charge, it is intended that this process will begin in a matter of months."—[OFFICIAL REPORT, 24th November, 1964: Vol. 702, c. 1094.]
The general implication of that, of course, must be that the surcharges are here for a comparatively short time, and if this is the case then I would suggest to the Minister of State that to bring the date forward to the end of March, 1965, is the right way to deal with this matter, as far as Parliament is concerned. In other words, if it is to be a matter of months we should in the Bill fix the end of March, and if the Government then feel they wish to continue the surcharges for a longer period they can go back to the House of Commons for an affirmative Resolution in order to be able to continue them. I hope, therefore, that the Minister of State will feel that this Amendment fits in with the Chancellor's plans and purposes as he described them in his Second Reading speech.
The second point I should like to make is that this Amendment fits in with the importance of the subject itself. I do not think that anybody, after the history of the last 46 days—if that is what it is now—could have any doubt about the importance of the surcharges in the economic history of this country and of Europe and in the life of this Government, and I think that the importance of this matter is such that it ought to be brought before Parliament again at the end of March if the Government want to carry on with them. The Chancellor himself said that they affect some £1,700 million worth of our trade on the estimates which he made for trade for 1964. Surely something which is described as temporary, a matter of months, and which affects £1,700 million worth of imports into this country, is a matter which Parliament ought to be able to reconsider at the end of March before he brings forward his next Budget.
Of course, the effect of this will depend on the extent to which other Amendments put down by my hon. and right hon. Friends are accepted by Ministers, but at the moment the importance of this measure is increased by its breadth and the consequences of imposing it. After all, it is a measure which is imposed on goods already ordered and which have got to come in and it is imposed on goods which are in transit and which have got to come in, and on many fundamental raw materials even though they have been primarily processed in some form or another, materials which are essential for building, which are essential for manmade fibres, and essential for printing. All these things will be covered by the surcharges, and unless our Amendments are accepted the surcharges will be a very great burden on those items for industry, and they are of great importance to the price level in this country. Therefore, because of their importance I feel that the House of Commons should have an opportunity of considering them again before the end of March.
The third reason is that these surcharges, as the Government have now frankly stated, are in breach of nine different international agreements. The emphasis has, perhaps, been on the fact that the imposition of the surcharges is a breach of the agreements, and naturally attention has been focussed on the animosity which this has aroused in a number of countries in the G.A.T.T., E.F.T.A., the Commonwealth, and so on. What has been less emphasised is the fact that we are continuously in breach of these agreements all the time the surcharges are in action. Surely we do not want to be in breach of the agreements a moment longer than necessary, and if we are continuing in breach of the agreements the House ought to have an opportunity of looking at them again, and looking at them again in a matter of months, which is the period the Chancellor of the Exchequer himself spoke of in his Second Reading speech.
Another reason why I emphasise the importance of bringing this back to the House of Commons is that these surcharges are fundamentally protectionist. They add another 15 per cent. of protection for British industry, in many cases a number of times the tariff protection industries are getting. They have

suddenly got another 15 per cent. of protection with the surcharges.
I do not think the Government have quite realised the impact of one of the sentences in their original White Paper, The Economic Situation, published on 26th October. In paragraph 6 they said that:
So far as imports are concerned a sharp distinction must be drawn between the increase in raw material imports required to service an expansion in production and the disturbing increase in manufactured goods most of which this country should be perfectly capable of producing on a competitive basis.
That phrase "most of which" applied to manufactured goods has undoubtedly given the impression abroad—and the Prime Minister's past utterances, of course, bear this out—that the Government think that we import raw materials for goods and we export industrial products and that the modern development of post-war trade, which is an exchange of industrial goods between industrial countries, has been completely overlooked and the Government want to stop it.
This fundamentally was the basis of so many of the anxieties of the countries which are affected by the surcharges. They believe that the purpose of the present Government is to have a protectionist system going back to the prewar arrangement by which we imported raw materials which enabled us to supply ourselves entirely with manufactured goods and to export manufactured goods as well. As this means grave damage to the trade of industrialised countries, naturally they are strongly opposed to it.
It is to demonstrate what quite certainly the Chancellor of the Exchequer has said, to demonstrate that the Government are prepared to consider reducing the charges, that the House of Commons should have a fresh look at this, and I suggest that that is a very strong reason why it should be looked at before the end of March, in order to dispel the idea that this is a protectionist measure deliberately imposed by the Government for this purpose.
Of course, we must not underestimate the pressures under which the Government will be once they try to remove or reduce these surcharges when costs have been allowed to rise meantime. The pressure from business, from manufacturers,


and, above all, trade unions, against removing this protection will be very great indeed. There is no doubt about that. Therefore, from the point of view of the Government themselves this has to be realised, that the longer this goes on the more difficult it will be to get the surcharge off, because industry, management and trade unions, will have become acclimatised to this additional protection. I would suggest that it is in the interest of the Government themselves that they should have this additional weapon of saying that they must bring the matter to the House of Commons before the end of March. They will, in getting a further Order, have the utmost difficulty with all those who want to see an increase in world trade and not a limitation of it through protectionism. Therefore, this Amendment would strengthen the Government's own hand in dealing with the protectionist pressures which they will have to fight.
For the reasons I have given, and in order to show a proof of their good will, as expressed in the words which the Chancellor of the Exchequer spoke, I hope that the Government will accept this Amendment, which brings the whole matter back to the House of Commons before the end of March, in the last few days of March, and which will give them the opportunity for renewing the powers thereafter for a year. This will do something to ease the difficulties which have been encountered amongst so many of our friends abroad. It will take many years to recover from the alienation of our friends abroad, due to the way in which these surcharges were imposed and handled.
I am unconvinced by the many statements of right hon. and hon. Gentlemen opposite that no consultation was possible. It was possible in a very brief time, through the existing organisations, to consult these countries, to get their views on the matter, to get them in secrecy, and to take account of them. The Government have taken account of some factors. I hope that they will take account of more during the debates on the Clauses which follow.
This wound will take a long time to heal. The Government could do something to help by saying that they are prepared to bring the matter back to Parliament before the end of March—nearly

six months after the charges were imposed—and not wait until the end of 1965.

Mr. Michael Foot: The right hon. Member for Bexley (Mr. Heath) said at the beginning of his speech, quite properly, that he came here this afternoon to discover the purposes and intentions of the Government, as he has every right to do. I came here today to discover the purposes and intentions of the Opposition, which I also have a right to do, particularly because of the confusion which they have shown on this aspect of the measures taken by the Government.
I am not at all surprised that the right hon. Member for Barnet (Mr. Maudling) is not present. I do not make any criticism of him on that count, but, of course, it is evident that the right hon. Member for Bexley and the right hon. Member for Barnet take an entirely different view about the imposition of the surcharge, and therefore, no doubt, they also take a different view about how long these surcharges should be maintained. However, I shall come to that aspect of the matter in a moment.
In putting his case this afternoon, the right hon. Gentleman excelled his own standards of disingenuity, because he suggested that he had come here to help the Government, to ease their passage and to dispel these rumours that the Government had imposed these surcharges for protectionist purposes. In the country and in the House the right hon. Gentleman has been the foremost member of the Opposition in suggesting that these surcharges were imposed because the Government were protectionist, The right hon. Gentleman has made great, if rather ineffective, play with the statement of the Prime Minister that some people might call him a little Englander. It seemed quite a genial remark in the context, but the right hon. Gentleman uses that as a great declaration of policy.
For the last four weeks the right hon. Gentleman has been using all his considerable powers to persuade the country, and such foreigners as may pay much attention to him, that the Government are protectionist, and it is really hypocrisy for him to pretend this afternoon that what he is really trying to do is to dispel this unfortunate impression which has


somehow got abroad, he knows not how. The right hon. Gentleman might have put his case a bit more openly than that.

Mr. Heath: I am not trying to dispel the impression for the Government but giving them the opportunity to dispel it for themselves.

Mr. Foot: We shall come to each part of the right hon. Gentleman's argument. What I was complaining about, and I thought with every justice, every good ground, was that the right hon. Gentleman was seeking to suggest that he was helping the Government by trying to dispel the idea that these proposals are protectionist, when, in fact, he has been trying to tell people at the top of his voice that these charges and the whole purpose of them are protectionist, or at any rate that a large part of their purpose is protectionist. If he really wanted to assist the Government in these difficulties, he might have emphasised that the surcharges were not imposed for any protectionist purposes. Nobody can deny that some of their effect is protectionist, but, obviously, they were not imposed for this purpose.
I deal next with the right hon. Gentleman's second proposition, that if we accept his proposal now it will help the Government, and the Government will have to come along in March to seek a fresh mandate for the maintenance of these surcharges. I dare say the right hon. Gentleman suspects—none of us knows for certain—that the Government will reject his proposition, because, if they accepted it, it would mean that they were taking power to maintain the surcharges for a very few months.
6.45 p.m.
It is a question of how much is a few months. The period from December to March does not cover many months, but what will happen now is that if the Government insist, as I think they have a right to do, that they will maintain the surcharges without having to come to the House again for six months and reject the right hon. Gentleman's proposal, he will be further assisting the spread of the idea that the Government have protectionist purposes in the maintenance of these surcharges. In other words, his proposal, so far from assisting the Government in dealing with the eco-

nomic position of the country, will only injure them further.
I understand the right hon. Gentleman's view in this matter. I only complain about the lack of candour at the beginning of his speech. He is opposed to the surcharges root and branch. In a speech that he made in the House on the Budget debate we had many words from him on other matters, but he was bitterly opposed to the surcharges. In some respects, the right hon. Gentleman is a free trader, although he tried to get us into the most severe protectionist system the world had seen for many years. He tried to get us into the de Gaulle Zollverein. There are arguments as to who are free traders, but the right hon. Gentleman was bitterly opposed to the surcharges right from the beginning, and he wants to get rid of them as quickly as possible.
That, however, is not the view expressed by the former Chancellor of the Exchequer who, after all, is an authority on this matter of the surcharges. On 4th November, 1964, he said:
 As part of their short-term measures, the Government have decided, in the light of estimates in front of them, that the time has come to employ these measures to operate directly on the balance of payments. I entirely agree with them that if they feel now—and this was their judgment and responsibility, which we will not oppose in principle in any way at all—that action should be taken, then they are right to act directly on the balance of payments and not by 'stop-go' or deflation."—[OFFiciAL REPORT, 4th November, 1964; Vol. 701, c. 239.
That was a statement by the former Chancellor of the Exchequer, that he would not oppose in principle in any way at all the imposition of the surcharges. That is not the view of the right hon. Member for Bexley.
We all know what happened. We all know that after the former Chancellor of the Exchequer made a speech of that character and they heard the more rebellious note sounded by the right hon. Member for Bexley there was a revolt by Members on the benches opposite who complained about the lackadaisical manner in which the right hon. Member for Barnet made his non-attacks on the Government. They had a meeting at which they complained about it and said, "We must be more vigorous in future", so they cast aside the under-


taking which had been given by the former Chancellor immediately after the Government came to power, namely, that in his view the Government were fully justified in going ahead with the proposals which they made about the surcharges, and I imagine that if the right hon. Member for Barnet thought on 4th November that the Government were fully justified in imposing these surcharges to deal with an extremely serious balance of payments crisis he would not be so foolish as to come along a couple of days later and say that the surcharges should be limited to the period ending in March.
That is one explanation why he is not here. The conduct of the right hon. Member for Barnet is one reason for the distress which we detect on the faces of hon. Members opposite. They are very concerned that the balance of payments crisis has been shown to be much bigger than they were told. They would not have been surprised if the right hon. Member for Monmouth (Mr. Thorneycroft) or the right hon. Member for Bexley himself had been found guilty of cooking the books, but not dear old, comfortable, ruminating Reggie. To be deceived by him is like being suddenly bitten by a shaggy family pet. Naturally they are very distressed, and naturally they say, "We cannot have a shaggy family pet leading the Opposition when they are trying to deal with this problem."
I have been trying to work out from the right hon. Gentleman today, and from his previous speeches on the matter, exactly how he thinks that the Government should have dealt with this situation. The surcharge that we are debating is one of the central parts of the Government's plan for dealing with the difficulty. The surcharge was approved, first of all, by the right hon. Member for Barnet. What is the alternative? I gather that what hon. and right hon. Gentlemen opposite are suggesting—and here there is absolute unanimity between the right hon. Member for Barnet and the right hon. Member for Bexley—is that the Government should have come to power and then should have issued a statement after a few days expressing their overwhelming gratitude for the very strong financial position which they had been left by their predecessors. It is suggested that the situation would have

been helped if a statement had been made by the Prime Minister that our economy had seldom been stronger.
They would have preferred that, and then, following such a statement, they would have wanted us to go to those European countries and ask them to agree to our imposing a surcharge. The principle of the surcharge is accepted by the right hon. Member for Barnet, but not by the right hon. Member for Flint, West (Mr. Birch). His objection is that we are breaking international obligations. He must argue that point out with his right hon. Friend the Member for Barnet, who does not take that view, because on the first occasion that he had the chance of giving his estimate of what should be done he advocated the imposition of the surcharge, even though it involved serious breaches in our international obligations.
What was it that the right hon. Gentlemen were recommending that the Government should have done? They were saying that, somehow, having told the world that our situation was no more serious than the present Leader of the Opposition was saying during the General Election campaign—although we had discovered that the figure was at least £100 million and possibly £200 million greater than any figure ever presented by the former Chancellor—we should have gone to these European countries in order to get their agreement to the imposition of the surcharge. We were to say to them, "Our economy is very strong, but we want your assistance in imposing a surcharge of 15 per cent., which we think will help us out of our difficulties. We want to make sure that you have sufficient time for consultation, and we should be grateful for your views on the matter."
What would have been the situation then? The Danes, the Swedes and all the other European countries concerned would have said, "We cannot possibly agree—first, because you do not need any of these measures, on your own reckoning and on the statement of your former Prime Minister, backed by your present Prime Minister." They would also have said, "Of course we cannot agree. We have our own electorates and our own Houses of Parliament to convince. You have asked us in advance to agree to the imposition of a 15 per cent. surcharge, and we are bound to say 'No'. If somebody gets up in our Parliament, after the


British Government have imposed this surcharge, and says, 'Were you ever consulted by the British Government on this matter?' we would have to say Yes and then we would be asked, What was your reply?' and we would have to say, 'Our reply was that we did not like it at all, and opposed it strongly.' Then they would say, You should have opposed it more strongly.'" The proposition that the Government could impose this 15 per cent. surcharge by the method described by the right hon. Gentleman is utterly absurd.

Mr. Heath: What the Government have had to do since the imposition of the surcharge is to send Ministers to every sort of gathering in Europe in order to explain what they have done. They have been met with the greatest animosity, because this action was taken before they said anything to any members of E.F.T.A.—to which organisation we belong—or the G.A.T.T., or the Common Market, or other countries affected. Surely it would have been better if the Government had followed the normal course of going to the Permanent Council of E.F.T.A., which can be summoned at a moment's notice, and going to the Permanent Council of the Community, in Brussels, which can be summoned at a moment's notice, and to the Permanent Council of the G.A.T.T., and making their explanations there before taking the drastic step of imposing this surcharge, rather than try to pick up the bits afterwards.

Mr. Foot: On these matters the right hon. Gentleman disagrees with his right hon. Friend. That is one answer. The other is that if we had done that in respect of the E.F.T.A. countries, the countries associated with the G.A.T.T. and the other countries concerned, what would they have said, especially if we had already made all the statements that the right hon. Gentlemen suggest we should have made about the strength of our economy? They would have said, "Of course we will not agree." In the meantime the run on sterling would probably have started a good deal earlier.
In this debate I cannot go into other reasons why the run on sterling began. It was because of the nature of the Budget. Right hon. Gentlemen opposite have stated on many occasions that that was what caused it. But it was not

the measures in the Budget that they disliked that persuaded the financiers to put the screw on this country; it was precisely those items which hon. Members on this side of the Committee found best about the Budget, namely, the measures for improving social benefits. Previously, whenever there has been a financial crisis of this character we have not put on surcharges of the type that we are debating today. They are abnormal. They have never been taken in connection with a balance of payments crisis before. The right hon. Gentleman says that we could have dealt with these matters in the same way as in the past. But this was an abnormal measure—an emergency measure—to deal with an emergency which the right hon. Member for Barnet acknowledges even if the right hon. Member for Bexley will not.

Mr. Heath: To my recollection my right hon. Friend has never discussed the question of consultation. We have had to discuss emergency matters with E.F.T.A. before. When the decision to enter into the European negotiations was taken it required immediate discussions with the E.F.T.A. countries, and we carried them out in 24 hours, with complete secrecy, and then the announcement was made in Parliament directly afterwards. The same could have been done in this case.

Mr. Foot: That was a very different proposition. The right hon. Gentleman is trying to compare the proposals in respect of the terms on which we were to enter the Common Market with those for the imposition of a temporary surcharge. During the period when the right hon. Gentleman was negotiating to get into the Common Market there was not a balance of payments crisis all the time. This Government had to deal immediately with a balance of payments crisis, and they had to take emergency measures to do so. What we are now discussing is one of the emergency measures which the previous Chancellor of the Exchequer said we were entitled to do—as I have tried to drill into the heads of hon. and right hon. Gentlemen opposite, although it seems to require an old-fashioned surgical operation to do so.
7.0 p.m.
In his first speech from the benches opposite, the right hon. Gentleman said that the gap in the balance of payments was wider than he had ever been told by his advisers. So the right hon. Gentleman's idea of how this surcharge could have been operated is not, in my opinion, valid, and I do not think that anybody who has listened to his account of how this crisis could have been dealt with can really think that it was a serious proposition. Ever since the election the right hon. Member for Barnet and his hon. and right hon. Friends have played politics—ever since the first day. I do not complain very much on that score. That is what I expect. I think they want to scramble back to office by any possible means, and included among their means they are quite prepared to back the view of every country in Europe or every country in E.F.T.A. or every country in the Commonwealth against this country.
The right hon. Gentleman talks about the good faith of this Government. He says that it will be years before we can repair the alienation in those countries. He says that and thinks that he is, at the same time, trying to assist this country. One of the most interesting things to notice when hon. and right hon. Gentlemen opposite cross from this side of the Committee to that is how quickly and easily they shed their patriotic cloaks. They become not only the friends but the passionate lovers of almost every country but their own. They embrace Dr. Verwoerd, they blow kisses to General Franco, and they even, at the last moment, start making ogling glances at President de Gaulle. The right hon. Member for Bexley, of all people, is paraded before us as the man whose delicate and tender advances could have dealt with this situation in such expert fashion, this Don Juan before whom every political maiden surrenders without a tussle, this irresistible suitor, this Casanova from Kent. But he is not the real person to lecture my honourable and puritan Friends at the Treasury about conducting their affairs in Europe.
The right hon. Gentleman in his tenure of office was in charge of the negotiations with these countries. He consulted them, but he should know over many years how strong and passionate was the

opposition to the measures which he proposed among Commonwealth countries, among some of the E.F.T.A. countries and among European countries. Or is he trying to tell us that in the face of all his skill even the sweet and chaste Marianne swooned before his feet? No, this was not the case. Right hon. Gentlemen must learn that they have lost the election. They are very poor losers. We thought that that was the one thing they learned at their public schools. They ought to learn to take their defeat with a better grace and, in the meantime, not to retire to the City but, better still, to retire to Trappist monasteries. That is where they might really carry out reforms which might equip them, not to run the affairs of this country but to make a little intelligent opposition.

The Deputy-Chairman (Sir Samuel Storey): Mr. Emery.

Mr. Heath: Before the hon. Gentleman sits down, may I say that I have been very flattered by all his attention—

The Deputy-Chairman: Order. I called Mr. Emery.

Mr. Peter Emery: I have seldom heard a speech of such amusing character which set out from the very word "go" to say that we have international treaties, and that if we do not like them, then what we want to do as a Labour Government is break them here and now. That is exactly what seemed to be a major part of the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot). He says that we have a treaty, and that we cannot consult; if we cannot, it does not matter, although it may be written into that treaty that consultations shall take place.
If the hon. Member for Ebbw Vale thinks that it is in the best interests of this country not to do that, then we should break that treaty. What are international treaties about? They are about matters of confidence between one nation and another, and, whether the Labour Party like it or not, in Europe confidence in this country has been shattered by the action of the Labour Government. If I may, I should like to suggest that one of the greatest surprises has been among our real friends in Europe. It is the people who really trusted us, it is the Norwegians, it is the Danes, it is the people who through thick


and thin have always stood by us, who were the most greatly surprised by the action of the Labour Party.
I have had sent to me by an extremely pro-British Norwegian the only Norwegian business publication, by name Formand. It is a monthly which is circulated to nearly every business house in Norway. Its leading article, the first since the sure larges, says:
The British Labour Party has given E.F.T.A. co-operation a shock it probably will never overcome. Even if the 15 per cent. import duty should be discontinued after a relatively short time, we are nevertheless afraid that the psychological basis for a further development of E.F.T.A. co-operation has disappeared.
The article continues:
 It is not only the faith in the sanctity of international treaties that has been weakened on this occasion; it is the faith in England. Among those nations Norway trusted to keep their international commitments, England took the first place. Or, to say it the other way round: the last country we expected voluntarily to disregard its international commitments, is that same England. If we cannot trust England which nation can we trust?
This is from some of our greatest friends in Norway. How can Members from the opposite benches get up and say that this does not matter? How can they possibly argue that this is something which can be put aside?
That is one of the reasons why I hope the Government will accept this Amendment, because the very basis of it is to try to define what is meant by the word "temporary". It is only meant to be a "temporary" surcharge. Surely, in most people's minds, 12 months is longer than "temporary" for surcharges which are breaking a treaty. We are suggesting in this Amendment that a six months' period will begin to defend the good words of the Government politicians at the moment touring Europe. They could be brought down to base on a six months' period. If they mean what they say, if they really intend to carry out what they say, then surely this Amendment, with, if necessary, an extension of a further 12 months, would put us entirely into the position of having a temporary surcharge.
The last point I should like to take up is again a matter raised by the hon. Member for Ebbw Vale. He suggested that it was impossible to consult—that we could not go round. It is quite surprising that if there had been a moment's thought about the method of bringing this

in, half the animosity in Europe could have been avoided. If it was so essential—I do not accept that it was—to do it immediately, why did not the statement from that Dispatch Box say, "We shall bring it in for eight weeks, while we consult with our European treaty partners and with the Commonwealth." This does not limit one to having it for eight weeks only, but at least it gives the impression abroad that we really mean to live up to our treaties.
In order to define what the Labour Party mean by "temporary", I hope very strongly that the Government will accept the Amendment.

Colonel Sir Harwood Harrison: I cannot believe that the speech of the hon. Member for Ebbw Vale (Mr. M. Foot) has helped this country to sell one kettle, pot or pan. It was one of the most irresponsible speeches against the good trade relations of this country that I have ever heard. The hon. Gentleman twitted us about crossing from the benches opposite to these benches. We have seen him cross from these benches to the Government back benches, and he is still below the Gangway. We now know that his right hon. Friend the Prime Minister was probably right to keep him below the Gangway because of his irresponsibility.
I support the Amendment because I hope that if the Government accept it we may repair some of the damage which has been done to our export trade. There is no shadow of doubt among those of us who are engaged in the export trade that it is the good will of the countries to whom we sell and the good will of their merchants and importers which matters very much. Before I became a Member of the House I travelled to many of the market places of the world in different countries selling goods. I do not suppose that any one of the Ministers on the Treasury Bench has actually gone out to sell the goods that we make in this country. If they had, we might have had a different approach to this matter. It takes a long time to build up good will. One may well meet a customer after breakfast in his office and go off with him to lunch and then come back, and then after a break, perhaps even after dinner, if one produces a contract, the customer may say, "We absolutely agree


with everything, come to the office tomorrow morning at 9 o'clock". Then one has to start all over again.
These are difficult negotiations for our exporters, and nothing that has happened so far as a result of the surcharge has done other than make the task more difficult. We know that at the moment the pipeline is full of orders, but I wish to sound a note of warning to hon. Members opposite. After their behaviour it may be difficult to maintain a high rate of exports this time next year. That is the situation which faces the country. Making this surcharge really temporary would be one way in which we might recover some of the good will that this country has lost. It is an indication of the hurried manner in which this surcharge was imposed that it was clamped on all goods whether they were on the seas or in ships berthed and ready to discharge their cargo. That shows that the party opposite was simply trying to upset some of our best customers.
I hope that the Government will accept this Amendment. They would be wise to do so, because its acceptance would go some way to repair the damage which they have done. Hon. and right hon. Members opposite never seem to learn what our trade is really about. They seem to think that the Chancellor need only call together a committee of people who sell exports and make a lot of speeches. That of itself does not sell exports. Hon. Members opposite talk about productivity and they think that if cars are at the dock-side, they are sold. But not only have exports to be sold; they must be sold in the right markets. That is what matters. During the last Parliament we had instances of hon. Members opposite wanting us to sell to countries which were not creditworthy. It is not until we have been paid for the goods and the money is in the bank that the transaction is completed.

Mr. Julian Snow: On a point of order, Sir Samuel. I hesitate to interrupt the hon. and gallant Member for Eye (Sir H. Harrison), but it seems to me that he is slightly out of order. Would not his remarks be more appropriate in respect of Clause 4, about which some of us

may have something to say? We are here dealing with imports and not with exports.

The Deputy-Chairman: I thought that the hon. and gallant Member was expressing reasons why this should be a temporary charge.

Sir H. Harrison: I was trying to do that, Sir Samuel, and to state the reasons why I consider it so important for our exports that the surcharge should be dealt with in the way suggested in the Amendment. I hope that the Committee will support the Amendment.

7.15 p.m.

Mr. Nigel Birch: The hon. Member for Ebbw Vale (Mr. M. Foot) was prolix to the extreme. His speech was drivel, but it was very long. I suggest that if the hon. Member proposes to speak at such length on the Finance Bill the Prime Minister may find it wise to have "three feet" in his Government, otherwise it will take a long time to get the business through.
As the hon. Gentleman very rightly said, I am opposed in principle to this surcharge and would have been whoever had introduced it. I believe that it is absolutely wrong. Quite apart from the question of breaking agreements, I believe that it is unacceptable economically.
I do not know whether the hon. Member for Ebbw Vale read it, but some hon. Members opposite may have read a recent issue of the publication of the National Institute of Economic and Social Affairs, which goes into this question of the effect of the surcharge and reaches the conclusion that it would add very considerably to the inflationary pressure in our economy.
What will happen is that potential imports that we should have had, if the surcharge had not been imposed, will simply find their way abroad and as soon as the surcharge is taken off they will come into this country with a rush; so that our final state will be worse than the first. The pressure in the economy will have been increased and the capacity to suck in the imports which have been held back.
It is significant that the run on sterling did not start until after the surcharge had been imposed. The surcharge was supposed to stop any run on sterling. I think it important that the Government should


indicate their intentions more clearly. When the Foreign Secretary and the President of he Board of Trade approached the E.F.T.A. countries they spoke about the surcharge being withdrawn in a matter of months. They probably did that to get out of a very difficult situation. We do not want to be caught out again breaking agreements and misleading people. If they did say "in a matter of months", and meant it, a way to show that they meant it would be by accepting this Amendment. If the Government do not accept the Amendment I think that the E.F.T.A. countries will reach the conclusion that they were simply being kidded along and, in fact, that might well have been the case.
I cannot see why the Government should not accept the Amendment. Its acceptance would, at any rate, be an earnest of good faith and do something to repair the damage which has been done. I hope that we shall press this matter to a Division.

Sir Frederic Bennett: Life is full of surprises. I must confess that I never thought that I should witness the hon. Member for Ebbw Vale (Mr. Michael Foot) dressing himself in a Union Jack and lecturing the rest of the Committee on patriotism and loyalty to country and party. It is a sorry sign of the weakness of the Government's case that they have had to rely on someone to spring to their aid so fervently who is not exactly noted for springing to the aid of his own party.
From what the hon. Member for Ebbw Vale said, one would assume that what is felt by members of the Tory Party has been invented by ourselves and that foreigners have no reason to feel upset. If that is so, why did the Foreign Secretary, Mr. Gordon Walker, tear off to Geneva and practically plead almost on bended knees with all the members of E.F.T.A., including Labour Governments, for their support and help? If this is all imagination on the part of hon. Members on this side of the Committee, why did the Foreign Secretary do that? Why did he say that this was all a vast plot by the City, the banks and the Tories—which is the usual thing? On the contrary, practically on bended knees he tried to get himself out of the mess which had been achieved

by the method adopted by the Government in handling the matter.
The hon. Member for Ebbw Vale knows very well that it is not a question of my right hon. Friend the Member for Bexley (Mr. Heath) influencing foreigners by his speeches. One cannot find any foreigner who does not feel outraged by the situation at the moment—and that ranges right across the whole of our trading partners.
I should, therefore, like to ask a question which was answered by no means satisfactorily at Question Time today. Does it not seem that the Government gave prior communication to the United States? If so, I was told something which was incorrect today, to put it no more impolitely, and if it was possible to convey some prior information to America I do not see why it was not possible to convey some information to E.F.T.A. and the Commonwealth. If information was given to one, why was it not given to the other? Instead of the sort of cheap tirade launched by the hon. Member for Ebbw Vale, he should have considered why foreigners feel so upset about the surcharge. Why could not we have consulted them when, as I say, we may have consulted the United States?
The Government now find themselves in this difficulty. Having had virtually to eat their own words, and having had to promise that the surcharge will be removed within a very few months, I see a danger arising. Do not let hon. Members opposite say that this is a Tory plot. People who stockpiled in the summer thinking that the worst might happen—that Labour might get in, which, unfortunately, happened—will go on using their stocks and hold off making purchases.
People in that position have had a guarantee from the Government—for what such a guarantee is worth—that the surcharge will be withdrawn within a few months. They are, therefore, bound to hold off making purchases until it is withdrawn. I hear the hon. Member for Ebbw Vale muttering. He spoke for long enough while on his feet. I see no reason why he should continue his speech while in a sitting position.
As I was saying, any sensible person in business who stockpiled thinking that the worst might happen will go on drawing on his stocks and will not make new


purchases until the surcharge has been removed. Business people will, naturally, put off the evil day as long as they can. I cannot fathom why the Government placed such a surcharge on goods and then gave notice that they intended to remove it, thus defeating the whole purpose of the surcharge.
It is not merely in generalities that we can criticise the Government's action, or in regard to their timing and the method they adopted in imposing the surcharge. The surcharge itself was a clumsy thing to apply. Consider the effect of the imposition on our exports and exporters. In my constituency is a firm with a first-class exporting record. It produces a highly technical form of machinery, two or three items in the manufacture of which must be imported. This firm is finding itself in the greatest possible difficulty.

The Deputy-Chairman: Order. The hon. Member is straying far from the subject under discussion.

Sir F. Bennett: I am endeavouring to point out, Sir Samuel, that the surcharge is having such a serious effect that it should be removed as quickly as possible. Since I appear to be out of order in raising this matter, I will abide by your Ruling and pursue the subject further on the Question, "That the Clause stand part of the Bill".
For the moment I will merely tell the hon. Member for Ebbw Vale—and it is interesting to note that no other hon. Members opposite are anxious to spring to the defence of the Government—that rather than indulge in the sort of tirade represented by his speech he should attempt to restore and not destroy confidence in us in our markets throughout the world, markets in countries governed by Governments of various political complexions.

Sir S. McAdden: The hon. Member for Ebbw Vale (Mr. Michael Foot) can always be relied on to give a good performance and, so long as it is realised that his contributions to our debates are performances, and are treated as such, it is all right. But he invariably accuses his opponents of saying something that they have not said and proceeds, with a multitude of words, to prove that what they did not say was not true.
I fear that that has happened on this occasion. Although he referred to the speech made by my right hon. Friend the Member for Barnet (Mr. Maudling) on 4th November, I thought that, since one should not always believe everything one hears, it would be wise if I looked up my right hon. Friend's speech. Having done that, I have found that what the hon. Member for Ebbw Vale said my right hon. Friend had said was by no means an accurate picture of what was stated.
To listen to the hon. Member for Ebbw Vale one would get the impression that my right hon. Friend was wholeheartedly in favour of the 15 per cent. surcharge, that he had no qualms about its introduction and that he was extremely anxious that it should be imposed. Nothing could be further from the truth. My right hon. Friend did not say anything of the kind. The hon. Member for Ebbw Vale gave a variation of my right hon. Friend's words, and if one reads my right hon. Friend's speech one sees that he did not accept the premises on which the Government decided to take action. My right hon. Friend in fact said:
… if they feel now—and this was their judgment and responsibility, which we will not oppose in principle in any way at all—that action should be taken "—
and he added
 then they are right to act directly on the balance of payments and not by 'stop-go' or deflation."—(OFFICIAL REPORT, 4th November, 1964: Vol. 701, c. 239.]
I regret that the hon. Member for Ebbw Vale left some of that out. Perhaps he did not want us to know that as well as the surcharge we have also had stop-go and inflation.
I can understand hon. Members opposite not worrying too much about their treaty obligations. "They were entered into by previous Governments", they may say, "and since the Tories entered them we can ignore them". That might be their attitude. It would be wrong, but I would understand them taking it.
Having said that, I must make it clear that we are in clear breach—as hon. Members opposite must know—of the General Agreement on Tariffs and Trade. That was signed not by the wicked Tories but by a Socialist Government. The Socialists entered into that Agreement—a bit hurriedly because at the


time they wanted to get the American loan. It is interesting to note that a signatory to that Agreement was the present Prime Minister, then President of the Board of Trade—though trade was fairly bad in those days. That is why he was the President.
In these circumstances, no one can pretend that we are not in breach of our international obligations. It is highly desirable, therefore, that we should take the steps recommended by my hon. Friends and get on better terms with our friends overseas—friends we will have once again, I hope—by bringing a speedy end to these breaches of our international obligations.

Mr. G. R. Howard: I will not comment on the remarks of my hon. Friend the Member for Southend, East (Sir S. McAdden), except to say that while the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot) no doubt made many people laugh, the assertions in it will not read so well amoung our friends in Europe, where there is a saying perfide Albion, or perfidious Albion, to people who do not keep treaties.
It is not very nice for me to receive letters from Norwegian friends of mine, people with whom I served during the war and with whom I have formed strong links of friendship, saying what a distressing effect the surcharge has had on their businesses and workpeople. In one case the owner of a Norwegian factory exporting 40 per cent. of its goods to this country—having spent the last 10 years building up a market here—has written saying that he is back to where he started 10 years ago and that 50 per cent. of his employees have had to be laid off. I am afraid that the speech of the hon. Member for Ebbw Vale is not likely to generate much amusement in that factory.

Mr. Michael Foot: Can the hon. Member send to his hon. Friends in Norway a copy of the speech of his right hon. Friend the Member for Barnet (Mr. Maudling) on exactly this subject? I did not, as the hon. Member for Southend, East (Sir S. McAdden) indicated, misconstrue the words of the right hon. Member for Barnet in any degree whatever. The right hon. Gentleman dealt specifically with the question of international obligations and the imposition of the

surcharge, and he argued in favour of its imposition.

Mr. Howard: It will not be necessary for me to do that. The people about whom I am speaking are listening to this debate and will have heard the hon. Member's remarks. They will, therefore, be able to take back to Norway their own views on it.

Mr. Godfrey Lagden: If my hon. Friend takes the course urged on him by the hon. Member for Ebbw Vale (Mr. Michael Foot), may I suggest that he sends both speeches and allows his friends in Norway to judge the sincerity and truth of both?

7.30 p.m.

Mr. Howard: I do not wish to detain the Committee longer than is necessary, but I should like to quote what some friends in Portugal, another E.F.T.A. country, have said about the deep sense of hurt and injustice which this has created and what a Belgian friend has said. I was at a function the other day where an important member of the Belgian Chamber of Commerce in this country said to me, "If only we had been consulted. If you had come to us as partners and consulted us, we should have been able, perhaps, to go some way with you. But in doing this in defiance of treaty obligations and without any warning, your Government have done something which it will take months, if not years, to put right".
The lack of confidence in this country among countries abroad will have a bad effect on our exports. I speak as one who used to do this job many years ago. Before the war I used to go abroad, and an Englishman's word was his bond, especially in Eastern countries. A friend of mine who travels round the world says that he is amazed at the feeling against the British Government throughout the world. This is not a matter for joking or for amusing speeches. This is a matter which affects the prestige of this country abroad, and it should be looked on as such. It is for those reasons that I support the Amendment most wholeheartedly.

Mr. George Y. Mackie: I rise to put the Liberal point of view on the surcharge. Of course, we dislike it. We dislike it


historically. But we have leant over backwards to understand the Government's point of view. There is no doubt in our minds that they were left with an appallingly serious balance of payments position. Therefore, we have not voted against the surcharge, although we loathe and dislike it. We feel—in fact we know—that it is rather like the case of a drunkard trying to cure his disease by drinking a bottle of whisky all at once in the hope that afterwards he will be able to give up drink. The cause of the balance of payments crisis is primarily the fact that we cannot export cheaply enough to be profitable. There is no profit in exporting when the home market is so protected and so good. Therefore, the 15 per cent. surcharge must be regarded as a very temporary measure.
I understand that we are discussing the Liberal Party's Amendment No. 16, which suggests that the surcharge should cease to have effect in May, in six months' time. However, we hope that before then there will be, as a guarantee of good faith by the Government, a reduction in the duty which will enable hon. Members to judge whether it should be carried on and whether it was a temporary measure. We are prepared to give the Government a chance, although we dislike this surcharge. There is no doubt that there is a great deal in what hon. Members on this side of the Committee have been saying about its effect on the members of E.F.T.A. I understand, although I have only been a Member for a very short time, that if one proposes to attack someone notice should be given, and I feel that this might have been done in the case of the 15 per cent. surcharge.
Another reason why the surcharge should be removed as quickly as possible is that there is no doubt that manufacturers and farmers—indeed, everyone in the country who is in business—are mainly in business not for patriotic reasons but in order to make a living. If business people are able easily to dispose of their goods on the home market, they will not export for patriotic reasons. There is little doubt that the 1½ per cent. rebate will be quickly eaten up by increased costs in this country unless the surcharge is removed pretty rapidly.
Lastly, people abroad who sympathise with the Government's difficulties, and hon. Members on this side who are prepared to give them a chance to put the situation right, would be reassured if the Government gave a promise to come to the House of Commons in six months and to put their decision to us and give us a chance to discuss it. This would assist in reassuring a lot of people in this country and on the Continent that the Government mean what they say, that they are not basically protectionists. I have a sneaking feeling that some members of the Labour Party are protectionists. If the Government were to accept the Amendment in principle it would go a long way towards reassuring many people both here and abroad.

Mr. Charles Fletcher-Cooke: The hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) was quite right when he said that the surcharge would make the home market easier. That is its effect although it may not be its motive. But no one is interested very much in motives. What people are interested in is effects. The effect of this surcharge is to give protection to the home producer. Foreign or Commonwealth manufactured goods will be more expensive and thus a protective market will be given to the home producer. The surcharge is not put on for protectionist motives—we have been assured of that over and over again—but that is bound to be its effect. If it does not have that effect, the whole object of the exercise will have failed. The object surely is to make foreign and Commonwealth goods more expensive.
One Government spokesman, when the surcharge was first put on, cast doubt on that. In a pious speech, he expressed the hope that the prices of foreign and Commonwealth goods which came to this country would not be raised. This showed a degree of muddle-headedness which passed comprehension, because if the prices of foreign and Commonwealth goods are not raised the whole object of the exercise will be pointless. The object is to make people buy domestically produced goods, and they will be so persuaded only if the prices of foreign and Commonwealth goods are raised. This is symptomatic of the muddle into which right hon. and hon. Members opposite have got themselves.
Undoubtedly, every month that the surcharge continues there will be a sort of log jam. People who wish to buy foreign or Commonwealth produced goods will lay off buying because they have the word of several right hon. Members opposite that in a matter of months it will be taken off. Once that is said the surcharge loses its object to a large extent. People have only to hold off for a few months and to use up their stocks and not replenish them and they will be able o buy, as they have been doing semi-manufactured or completely manufactured goods from overseas.
So both in the speech made by a member of the Government when he said that he hoped that domestic prices would not be raised and in the remarks of several other right hon. Gentlemen when they said that the surcharge would be coming off in a matter of months, they have done their level best to ensure that the whole object of this surcharge is defeated. The only way to deal with it in that case is to take it off as soon as possible, certainly by May of next year, which is the six months' period mentioned by the hon. Member for Caithness and Sutherland.

Mr. Julian Snow: I listened with very great interest to the right hon. Member for Bexley (Mr. Heath) this afternoon, because in a curious way and as opposed to my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) I was myself strongly in support of the Common Market. I think that the time is long past when one need apologise for that sort of attitude, because things are different now and I do not think that the attitude of the Opposition has been particularly helpful.
7.45 p.m.
The more I listened to the right hon. Gentleman's speech, the more I came to the conclusion that he was speaking very much with his tongue in his cheek. No one has had more experience than he has of the effort-taking, time-wasting, frustrating sort of negotiations that he had when he tried to negotiate our entry into the Common Market. Therefore, when he spoke about the possibility of our having consulted countries abroad about the proposed action, I suggest that he knows perfectly well that that would have been time-wasting, time-absorbing and, in the end, completely frustrating,

because no one seems to have calculated, so far as I am aware, what would have been the position had such negotiations taken place.
Supposing that they had taken, as might well have been the case, three, four, or five weeks to produce any sort of agreement to disagree, with all the various consultations—I would have thought that a reasonable supposition—what would have been our imbalance of trade at the end of that period? I do not know whether one can delve into these highly speculative calculations as to run down in stock and the estimated improvement in the balance of trade that has been talked about, but is it too great a stretch of the imagination to say that if the imbalance of trade was between £700 million and £800 million six weeks ago by now would it be running at £1,000 million? I think that that is a reasonable calculation. There is a case for brutal action and again the right hon. Member for Bexley has been a victim of brutal action. Is it not about time that this country stopped being shoved around? [Laughter.] Hon. Members laugh, but we have been shoved around.
What trouble did the late Government take to demonstrate to the public the developing imbalance of trade between ourselves and other countries of the world? It was always taken as one cohesive figure. The right hon. Gentleman frowns as though he misunderstands what I am saying; let me explain further. I say that the late Government should have taken action to show the public just what countries were being greedy, to put it in simple terms, and the developing imbalance of trade between ourselves and other countries which should have been rectified by bilateral consultations.
Take the position which I see is now developing—perhaps I know a little more about this country than other countries—of Japan, the subject of a trade and navigation treaty less than two years ago. If we study the figures of British-Japanese trade at present, we see a very alarming situation developing with imports from Japan mounting steadily as compared with the increase of exports to Japan. That situation has been reproduced in many other countries over the last ten years. The situation was never brought home to our home manu-


factures—the situation where there could have been remedial action taken to stimulate industry to make us relatively if not entirely independent in certain categories.
The right hon. Gentleman said in effect, that this is a protectionist Measure. Of course, as a side effect, it must be, but surely there is a case for saying that we ought to have a breathing space in order to bring home to those industries which are negligent and sluggish what they ought to do to help us in our present state. I must be frank and tell the Committee that the more I listened to speeches by hon. Members opposite this afternoon, the more I came to the conclusion that the Tories in opposition had turned themselves into some sort of importers' lobby.

Mr. Heath: I know that the hon. Gentleman is taking this very seriously. All the facts and figures about the trade balances of individual countries are published regularly by the Board of Trade in the Board of Trade Journal. Every industry knows exactly what is happening in this respect. He cited the case of Japan. The Treaty of Japan, negotiated by my predecessor, was a balanced treaty which gave us very great opportunities, as well as giving the Japanese opportunities here, but constantly we have emphasised that our exporters have not taken advantage of these opportunities.
If the hon. Member looks back on the Board of Trade figures during the month preceding the election, he will see that the comments which were issued with those figures on each occasion were reported in the Press, and, within the scope of not being rebuked for exhortation, I said that what was essential was aggressive export selling and that this problem could never be dealt with unless this was done.

Mr. Snow: I do not want to fall into the trap by carrying on too much about exports, which was a point on which I raised a point of order earlier. What the right hon. Gentleman has just said exemplifies exceptionally well the weakness of Government leadership during the last 10 to 13 years in the matter of our export and import trade. He said that the figures are published in the Board of Trade Journal. That is correct. One

can read all sorts of balance of trade figures in the Trade and Navigation Returns. The fact is that individual companies have not the slightest idea of what goes on in the Board of Trade Journal.

Mr. Julian Ridsdale: The hon. Member has spoken about our treaty with Japan. Does the hon. Gentleman think that our trade treaty with Japan was a bad treaty?

Mr. Snow: The hon. Gentleman knows that I have a particular affection for Japan. I was addressing myself to replying to the right hon. Gentleman on his two points. First, I was saying that the average company, medium and large, does not really study what is said in the Board of Trade Journal. Something much more positive and direct for companies ought to be introduced.
Now I come to the question of Japan. I myself was extremely pleased about that treaty. Although I was pessimistic about the long-term trade with Japan there is at present and in the foreseeable future a reasonable chance of valuable exports.

The Deputy-Chairman: Order. I think that the hon. Gentleman is getting very far from the Amendment which we are discussing.

Mr. Snow: I will immediately leave it at this, that trade being two-way, importations from a country like Japan are getting out of hand, and this goes for other countries as well. The right hon. Member for Flint, West (Mr. Birch) said that whatever Government had been in office he would have resisted the surcharge. The right hon. Gentleman has a rather murky past on the question of support of the Government, and I do not think that I would attach particular value to what he said on that score. The fact of the matter is that, somehow or other we have to stimulate domestic production.
One hon. Gentleman opposite talked about offending those countries which had stuck by us through thick and thin. What about Sweden, a country which was neutral during the war and which, as far as I am aware, is the only one which so far has taken any sort of retaliatory action? In my view, the Common Market countries and most of the other E.F.T.A.


countries will not, in the main, take retaliatory action against us. Why? Because we are far too valuable a market. They may make loud noises—they have to—but they will not take retaliatory action. They know perfectly well that their economic health depends upon this country's economic health as well.
I wish that hon. Members opposite, who have given a very unfortunate impression today of advocating the interests of every country except their own, would realise that the facts are now relatively clear and accepted by their own Front Bench. We were faced with a situation which needed quick surgical remedial action. That action has been taken, and I for one think that the Government were absolutely right.

Mr. Ridsdale: In reply to the hon. Member for Lichfield and Tamworth (Mr. Snow), I must say that, in spite of all temptations to belong to other nations, I remain an Englishman.
What has been surprising about the debate so far has been the lack of supporters to come to the aid of the Government. During the last hour, there have been only two hon. Members opposite who have done so. The hon. Member for Ebbw Vale (Mr. Michael Foot), apparently, is the protector of his Prime Minister, the new protectionist, the protector of a policy of protectionism as opposed to what most people now realise the country wants more than anything else, that is, more competition.
The hon. Member for Lichfield and Tamworth emphasised the need to watch our exports, and he instanced what was happening in our trade relations with Japan. My reply to the hon. Gentleman is that we must in our own shipyards face up to the competition we are having and recognise that our trade union structure is out of date compared with that in Japan. It may be going a little wide of the point of this debate, but I must say these things in urging the cause of my own Port of Harwich. In my constituency, people are most concerned with the future prosperity of the European Free Trade Association and are extremely anxious about the dishonour and bad will which has been brought by the Government into our relations with the countries of the E.F.T.A.
Harwich has benefited considerably from the capital which has been brought

from Sweden to develop our new private enterprise port. A great deal of trade passes through the Ports of Harwich and Parkeston to the European Free Trade Association countries, and those of us who are interested in European trade are greatly disturbed by the measures introduced by the Government which will undoubtedly cause a contraction of trade and a contraction of the capital coming into Britain.
8.0 p.m.
This is why I for one heartily support the Amendment introduced by my right hon. Friend the Member for Bexley (Mr. Heath). I know how urgent it is that the surcharges be removed as quickly as possible. The only cure for our country's economic ills is more competition, not protectionism of the type introduced by the new Government.

Mr. A. E. Cooper: Listening to the speeches of the hon. Members for Ebbw Vale (Mr. Michael Foot) and for Lichfield and Tamworth (Mr. Snow), and studying the expression on the faces of those occupying the Government Front Bench, I was tempted to believe that they were now making a virtue out of the 15 per cent. surcharge. Apparently, this is something good for the country as an act of policy. The fact that, in the doing of it, they have destroyed confidence among our friends and broken goodness knows how many contracts seems to be a matter of complete indifference and unimportance to them.
If the hon. Member for Ebbw Vale, instead of commuting between the Tribune buildings and this place, would get out and about in the world and study industry in other countries, he would quickly find out, particularly in Europe, just what damage his Government have done to this country's industry.
The hon. Member for Lichfield and Tamworth talked about an imbalance in our trade of £600 to £800 million and he tried to justify the Government's action on that ground. There is no such thing as an imbalance in our trade of £600 million to £800 million. This figure is made up of all sorts of things. But the Government are very chary of telling us what they are. Yesterday, I put down a Question to the Chancellor of the


Exchequer in order to get the information. I asked the right hon. Gentleman whether
 he will give the breakdown of the estimated balance of payments deficit 1964–65 on 16th October, 1964, as between capital overseas investment, debt repayment—capital and interest—overseas loans and grants, balancing items and current trading figures ".—[OFFICIAL REPORT, 30th November, 1964; Vol. 703, c. 23.]
The illuminating answer I received was, "No".
We are entitled to ask whether this is a hoax which the Government are perpetrating on the British people so that we may become a protectionist country once more. The hon. Member for Lichfield and Tamworth accused the Opposition of being what he called an importers' lobby. Has he not bothered to study the Amendments to Schedule 1 already put down by the Chancellor of the Exchequer which release a lot of items previously to be subject to the 15 per cent. surcharge? The materials we are talking about on this Bill, the things which we want to get, are basic raw materials out of which we make goods to export and earn our living. We want to be rid of the surcharge as quickly as possible.

The Deputy-Chairman: The hon. Gentleman is going very wide of the Amendment which we are discussing.

Mr. Sydney Silverman: On a point of order, Sir Samuel. I did not gather that the Amendment now before the Committee had anything to do with basic raw materials. I thought it was an Amendment about dates on which the import surcharge should terminate or about the conditions on which they should be renewed, none of them discriminating between raw materials and consumer goods. I submit, therefore, that what the hon. Gentleman is now saying about discrimination in favour of raw materials, although it might be a valuable point to make, is out of order on this Amendment.

The Deputy-Chairman: That is exactly why I called the hon. Gentleman's attention to the fact that he was going very far from the Amendment.

Mr. Cooper: One thing is clear. If the points of order constantly raised by

the hon. Member for Nelson and Colne (Mr. Sydney Silverman) were currency, we should not have a balance of payments crisis.

Mr. Silverman: On a point of order, Sir Samuel. I do not object to the hon. Gentleman diverting attention from the point which was raised, but did not I understand that the point of order which I raised with you was decided by you in my favour?

The Deputy-Chairman: I had already reminded the hon. Gentleman that he was straying away from the Amendment before the hon. Member for Nelson and Colne rose to make his point of order.

Mr. Cooper: I am more than happy to leave myself in your hands, Sir Samuel.
The longer this surcharge is kept on our goods, the more damage will be done not only to the good name of our country but to the industries within it upon which we depend for our prosperity. All the wonderful social services talked about by the hon. Member for Ebbw Vale have to be paid for, and they are paid for only out of the produce of British industry. If we lose our good name, as the present Government have made us lose it, our task in the outside world will be made the more difficult.

Mr. Michael Foot: Scandalous. The hon. Gentleman should speak for his own country, for a change.

Several Hon. Members: rose—

The Deputy-Chairman: Mr. Gower.

Mr. Sydney Silverman: On a point of order, Sir Samuel. With great respect, I thought that it was the practice of the Chair to call speakers alternately from both sides of the Committee if speakers were available. I rose to my feet after the hon. Member for Ilford, South (Mr. Cooper) sat down.

The Deputy-Chairman: The hon. Gentleman must not criticise the calling of hon. Members by the Chair. What he says is correct, but for the last hour there have been hardly any hon. Members rising from the Government side of the Committee. Mr. Gower.

Mr. Snow: On a point of order, Sir Samuel. With very great respect—[Interruption.] I fail to see why I should


not express respect to the occupant of the Chair. Sir Samuel, with great respect, may I recall to your mind that you did not see me when I rose, and I am large enough to be seen.

The Deputy-Chairman: I apologise to the Committee if I looked rather to one side than to the other, but I think that I have had fairly good cause to do so.

Mr. Raymond Gower: I assure hon. Members opposite that I shall not detain the Committee for more than a few minutes. I was interested in the intervention by the hon. Member who spoke for the Liberal Party, the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie). He said that his party was prepared to give the Government the benefit of the doubt on the basic principle of the surcharge, but, nevertheless, supported the Opposition in their requirement that it should be removed very quickly, and he gave the reason that the Government had to impose the surcharge in view of the desperate difficulty which they faced.
I differ from the Liberal Party only in my assessment of the nature of the present trouble, which I attribute more to a lack of confidence in other parts of the world in the ability of the present Government than to any balance of payments difficulties which may have existed.
We listened to the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot) with great pleasure and amusement. In many ways, it was a meretricious performance, but it was a gifted one in terms of verbal gymnastics. The hon. Gentleman comes from a fine radical family, but I am certain that much of what he said tonight would have made old radicals cringe. In short, his argument was that most important and solemn treaty obligations freely entered into by this nation, whether under a Conservative Government in the case of the E.F.T.A. or under a Labour Government in the case of the G.A.T.T., were of such little importance and that we did not even need to consult the people with whom we had made the agreements before breaking them.

Mr. Michael Foot: I said nothing of the kind. I quoted what was said by the

right hon. Member for Barnet (Mr. Maudling) on the question of obligations. I certainly did not say that the question of how we abided by our obligations was a matter of no importance. What I said, and I stick by it, was a very different matter—that we could not impose this charge if we decided to do it after consultations.

Mr. Gower: That is where we differ. We on this side of the Committee believe that these agreements, entered into freely by this country are of some importance and the least that should have been done would be to consult and to have conversations with the other parties to the agreements. It is also incumbent upon us to say that the surcharges should last for as short a time as possible. I agree with my right hon. Friend the Member for Flint, West (Mr. Birch), who suggested that these restrictions were particularly objectionable in themselves, not only in the manner in which they were made, but that their intrinsic qualities are objectionable.

Mr. Iorwetth Thomas: When the hon. Member talks about contractual obligations, the courtesies of international political life and the importance of consulting allies, I wonder whether he remembers what the Government of that day did in regard to the Suez operation?

Mr. Gower: The hon. Member is not going to lead me from the argument. [Interruption.] An hon. Member who has not been present at the debate all the time, but interrupts, will realise that it is completely outside the terms of this Amendment and that it would be out of order to discuss the Suez or any operation of that nature.
The nature of these surcharges is in itself objectionable. As my right hon. Friend the Member for Bexley (Mr. Heath) said, they will inevitably create a new area of protection in our economy when an extended area of protection in the economy is the last thing we require in Britain today and would be the most damaging thing in present circumstances. I object too because these surcharges are largely indiscriminate in their impact. They will affect the good and the bad. They will affect goods we produce as well as those we do not. They


will affect commodities we require to sustain our export effort.
In my constituency there is a factory which has to obtain the raw material, silicon, to manufacture silica products. Their import will not be affected, but, the cost of the manufactured goods for export will be put up. In that sense the long maintenance of these surcharges may be positively injurious to the export effort we need to increase. I sincerely hope that we on this side of the Committee will press this Amendment to a very early Division—[HON. MEMBERS: "Hear, hear."]—that we shall press for a Division to show emphatically that we believe these restrictions should be swept away at the earliest possible moment and, moreover, that the memory of them should soon be—

Sir F. Bennett: Expunged.

Mr. Gower: I thank my hon. Friend for supplying the word, expunged.

Mr. Sydney Silverman: I have not heard all the speeches on this Amendment, but I heard the opening speeches and I heard the last two speeches. There have been some in the middle which I have not heard, but I have taken a little care to inform myself as to what was said in those speeches. I make one exception in the case of the right hon. Member for Bexley (Mr. Heath), who opened the debate on this Amendment from the Front Bench opposite.
The hon. Gentleman made a very different kind of speech from all the speches that have been made subsequently by hon. Members behind him. His speech alone from his side of the Committee failed to attack the import duties in principle. He devoted himself strictly to the point he made about the timing of them, about the duration of them, about the Parliamentary procedure to be adopted if they are to be continued beyond a date when he thought they ought to come to an end. All this was perfectly reasonable and legitimate debating, but in my opinion that was the only speech in support of the Amendment which was legitimate.
All the other speeches in support of it have been attacks upon the principle of the import duties itself. They have been saying that it was wrong on a variety of grounds, that it was bad in principle because it was a protectionist tax and we

were not a protectionist country. They said that it was bad in principle because it represented a breach of agreements into which we had solemnly entered and which had lasted for a long time. It was bad because, in addition, it was done without consulting any of the people to whom we were bound and without any apparent consideration for anything that they may have thought a contempiated breach of our obligations.
Hon. Members opposite are quite entitled to make these points, to say that the whole thing is wrong and to say it in connection with an Amendment which is related only to time to duration and to the mode of renewal because, if we think that a thing is bad we are entitled to limit its operation and make it as difficult to operate as we can. No reasonable criticism of the legitimacy of that kind of debating can fairly be made.
8.15 p.m.
All the same, I say with forethought, and deliberately, that the speeches I have heard—and if the speeches I have not heard were, as I am told, of the same kind—were contemptible and deliberate hypocrisy, deliberate humbug, and deliberately insincere. Hon. Members opposite are not against the import duties as they pretend. If they had been against the import duties as they pretend, they had an opportunity of voting against them. Not a single man jack of them went into the Division Lobby against them. If they are as bad in principle as is being made out—illegal betrayals, wholly wrong, wholly insupportable—how does it come about that the right hon. Member had not a single word to say on those lines today and that no hon. or right hon. Member opposite at any time since they were introduced has availed himself of a single parliamentary opportunity of defeating them?
I know that my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) has dealt with this point already, but I want to add something to it. The right hon. Member for Barnet (Mr. Maudling), when my right hon. Friend the Chancellor of the Exchequer originally announced these proposals, said that they were right. He said from the Front Bench, speaking at the Opposition Dispatch Box, that the proposals were right.

Mr. Dan Jones: He did more.

Mr. Silverman: I know that he did more; I am coming to that. He not only said that they were right, but that they were exactly what he would have done himself. If my hon. Friend the Member for Burnley (Mr. Dan Jones) will allow me to say so that is not all that the right hon. Gentleman said. He made the further point that these proposals were right, these proposals were exactly what he would have done himself if the country had been so unfortunate as to find itself in a position in which he was still Chancellor, but the third point was, "I would not have done it yet. I would have waited a few months. I would have done exactly the same things, but I would not have done them at once, I would have waited a few months".
I wonder how the right hon. Member for Bexley reconciles that with the Amendment he moved today. How many months would the right hon. Member for Barnet have waited before he introduced exactly the same proposals as my right hon. Friend the Chancellor of the Exchequer introduced?

Sir S. McAdden: rose—

Mr. Silverman: No, I am not asking the hon. Member; he does not know.
I am pointing out that if the right hon. Member had waited a few months we may make some speculation about how many months. Supposing that he had waited for three months, he would then have introduced them in February. Would the right hon. Gentleman still have pressed that they should end in March? Suppose that he had waited for four months. Then they would have been introduced at the exact moment that the right hon. Member is now proposing to the Committee that they should stop.

Sir S. McAdden: He never said it.

Mr. Silverman: The right hon. Member is here and we all know what he said.

Sir S. McAdden: He knows what he said.

Mr. Silverman: The hon. Member for Southend, East (Sir S. McAdden) says that the right hon. Member knows what he said, but I also know what he said and the Committee knows.

Sir S. McAdden: Will the hon. Member be kind enough to give the reference

for the quotation from HANSARD? I have HANSARD here. My right hon. Friend did not say it.

Mr. Silverman: The hon. Member plays many debating tricks. I have known him play many in his time. It is not much of a compliment to an old colleague in the House to expect me to fall for another of them. The hon. Member must be a little more subtle. I do not fall for tricks of that kind quite so readily and I should have thought that the hon. Member, with whom I have been a colleague in this House for a long time, would have known that perfectly well.
If the right hon. Member for Barnet said that he agreed that the proposals were exactly what he would have made himself—

Sir S. McAdden: Where is it?

Mr. Silverman: —but that he would not have done it for a few months, that makes nonsense of this Amendment.

Sir S. McAdden: He did not say that.

Mr. Silverman: The hon. Member keeps saying, "He did not say that" but I happen to hold the Floor at the moment and I say that he did say it. I do not know whether the hon. Member was in the House when the right hon. Member for Barnet made the speech to which I refer. From his interventions I can only assume either that he was not in the House, or that he was asleep when the right hon. Gentleman was speaking, because all the rest of us heard it. [HON. MEMBERS: "No."] When the Budget Resolutions to embody these proposals were introduced by the Chancellor of the Exchequer, the Chancellor of the Exchequer, in the hearing of the right hon. Member for Barnet, made the point which I have just made, and the right hon. Member for Barnet did not repudiate it.
The right hon. Member for Bexley must be careful. It is quite true that all right hon. and hon. Members opposite are at sixes and sevens about these proposals as they are about a great many other things and it is very difficult to make a concerted attack on the Government from a party which has mutually exclusive points of view. That puts them into great difficulties and I have every sympathy with them in their difficulties,


but it does not help them to make a damaging attack such as they are trying to make. Let us see what they are asking if we are to take them seriously that the Committee ought to do or that the Chancellor of the Exchequer ought to have done in the first place.
Hon. Gentlemen argue that the import duties should not have been put on for all the reasons which we have been dishonestly given during the course of this debate. What, then, was the honourable thing which we ought to have done? We already owe something more than £700 million on this year's trading account.

Sir Harmar Nicholls: indicated dissent.

Mr. Silverman: The right hon. Member for Barnet admitted £400 million. In 1961, when the Conservative Government introduced a Budget intended to be restrictionist, in order to deal with what they called a most dangerous financial situation, the deficit was £260 million. The right hon. Member for Barnet admitted that he knew throughout the election that the deficit this year would be £400 million and my right hon. Friends say that when they came into office and had a look at the books they found it to be between £700 million and £800 million. Supposing that they are wrong and that it is only £400 million, only 40 per cent. more than it was in what hon. Gentlemen opposite described as the most dangerous year, 1961, what was the honourable thing, if we are to take them at their word, which hon. Members opposite wanted us to do?

The Temporary Chairman (Mr. E. L. Mallalieu): Would the hon. Gentleman kindly relate his remarks more closely to the Amendment?

Mr. Silverman: I thought that I was directing my remarks to all the speeches made in support of the Amendment. Would that be out of order? If hon. Members opposite are saying that they are supporting the Amendment because the import duties are wrong, I am certain that if they are wrong it means that they ought not to have been applied and that hon. Members opposite are, therefore, right to make it as difficult as possible to apply them. I invite the

Committee to look at the contrary proposition, to test whether the proposition which hon. Gentlemen opposite are now advancing is right or wrong. The contrary proposition would be that we do not have any of these import duties.
How honourable would it then have been to go on buying what we obviously could not pay for and to go on importing and importing and importing because we had made an agreement not to put on duties? Quite apart from the financial liability, what are hon. Members opposite inviting the Committee to believe about the honour of that? They have had much to say about the dishonour of breaking agreements, but how dishonourable it would have been to go on buying and buying and buying—

Hon. Members: Buying and buying and buying. [Laughter.]

Mr. Silverman: It is not a joke—knowing perfectly well that we could not pay for what we had bought already and that, if that situation remained unchecked, the time would come when we could not pay for anything. It is obvious that the right hon. Member for Barnet was right and his supporters wrong. Of course the import duties had to be put on.
It is then suggested that we should have consulted. What does "consultation" mean? Does it mean telling people that we intended to do it? This we did. If it means—

The Temporary Chairman: The hon. Gentleman must come more closely to the Amendment, which is about the matter of date and not the whole history of the affairs.

Mr. Silverman: I am still dealing with the speeches which hon. Members opposite have contributed to the debate inviting the Committee to accept the Amendment. I am trying to show that these arguments led to a reductio ad absurdum. If I am out of order, I will certainly stop, but I cannot see that I am. All these arguments were put forward to induce the Committee to accept the Amendment. I am merely testing their validity by testing them against what the position would have been if hon. Members opposite were right, in order to show that what they are inviting the Committee to do is something which they cannot support by their arguments.
If it was decided that it was right to put a brake on imports, it would have been the most stupid thing in the world to adopt a line of consultation, which must have gone on for a long time and which might have resulted in no agreement, but in the meantime allow imports to continue coming in, knowing perfectly well that we had no means of paying for them and that the result would be complete bankruptcy.
I invite the Committee, if I may venture to do with respect—for I have known many hon. Members opposite in the House of Commons for a long time and they are not always so dishonest as they have been throughout the debate—to reconsider the question and to consider whether they are wise or right to continue an attack on the Government and to make these proposals as difficult as possible to implement when they know perfectly well that in the circumstances the Government did the only thing they could do and that they would have done it themselves if they had had the chance.

8.30 p.m.

Mr. Burden: I have found the speeches of hon. Members from the Government Front Bench below the Gangway—I do not know whether there is anything significant in that—rather difficult to follow in many ways. I believe their remarks to be against the best interest of the Government which they were intended to help and also against the best interest of the country.
We are discussing the surcharges and the date on which they should be removed. The Government themselves have made it clear that they wish to remove the charges at the earliest possible moment. They do so because they accept that it is against the interests of the Government generally and of the country to continue them too long and they have admitted in any case that in order to introduce them they abrogated certain treaties.
I have found the speeches of hon. Members opposite extraordinary, particularly that by the hon. Member for Ebbw Vale (Mr. Michael Foot), whose speeches are always amusing but who did himself less than justice tonight when he did a great disservice to the country by implying—whatever he says now, the implication was clear—that the abrogation of these treaties did not matter. That

was the implication which the hon. Gentleman gave to the whole Committee.

Mr. Michael Foot: Absolutely rubbish.

Mr. Burden: I hope that the hon. Gentleman reads HANSARD tomorrow a little more accurately than he read remarks which he attributed to my right hon. Friend the Member for Barnet (Mr. Maudling).
I was equally surprised when the hon. Member for Lichfield and Tamworth (Mr. Snow) said that it was about time that other countries realised that we would not be kicked around. It is the other countries who consider that they have been kicked around by Her Majesty's Government. The sooner hon. Members opposite appreciate that, the further they will go to putting the matter right and putting it right quickly.

Mr. Snow: Surely I was not so ambiguous and unfair as all that. Surely I made it quite clear that what I was getting at was that, for a long time past and under the feeble leadership of the party opposite, we had been kicked around economically.

Mr. Burden: Again the implication is that we are now kicking back. What an extraordinary way to kick back!
This action was not successful. The hon. Member for Ebbw Vale said that there was not time for consultation, that decisions had to be taken quickly and that the Government had to take this action because of the pressure of events. But it has not been successful and there has been a run on the £ and a crisis which left the Government apparently completely impotent. That good old Tory institution, the Bank of England, quickly consulted the credit world and put the matter right. There was plenty of time to consult then when the crisis was much graver than it was weeks before when the Government put on these charges without consultation with anybody. The Bank of England had co-operation by consultation.
I hope that the Amendment will be accepted. The worst feature of these charges is that hon. Members opposite, not having much knowledge of industry and trade, have treated overseas countries as if they were suppliers in a buyers' market, entirely forgetting that they are


also our very important customers. That is where the grave danger of what has been done with the surcharges will be felt in future. How can we ever expect these overseas countries to want to enter into trade contracts with us if they believe that the contract can be thrown out of the window at the Government's will and that the action in throwing them out of the window will be supported by Labour Members?
I hope the Government also realise this, that this blow has gone far deeper than among the statesmen and politicians of the countries concerned; that it has struck at the industries and the economic well-being of the ordinary people of those countries. Resentment against the action of our Government has gone very, very deep. I hope again that they will consider taking the surcharge off as quickly as possible, because if they retain it its very retention will defeat their aims to give some stimulus to our exports by means of the export rebate.
I can speak from knowledge and experience and I know that people in Norway and in some of the other countries are demanding that the 2 per cent. rebate which will be given to exporters should be passed on to them in order to give them some rebate for what they have lost by the imposition of the surcharge. These are facts.
What the Government ought to have realised when considering this Amendment is that the sooner the surcharge goes off the less deep will be the hurt to the ordinary men and women in the streets and the homes and people going into the shops in those countries. If this surcharge goes on many of them will be thrown out of work. Do the Government really think that the people in countries affected are then going into their shops to buy our British consumer goods, when this country has helped to bring about their unemployment, their difficulties and their problems? That is how deep a thing this is.
I hope that the Foreign Secretary will respond to a question I wish to put, so that we can see how imperative it is that this surcharge be removed at the earliest possible moment. The question I put to him is this. I ask him to produce a transcript of all the speeches which were made at the last meeting of the E.F.T.A.

countries. I think that that would show how deep is the wound and how strongly they feel about the summary abrogation of the treaties by our Government who are supported in breaking them by hon. Gentlemen opposite.

The Minister of State, Board of Trade (Mr. Edward Redhead): This debate has ranged extremely widely, far beyond the somewhat limited scope of the Amendments which we have been discussing. I suppose that that was inevitable in the circumstances, and I make no complaint about it, except that I do not propose to traverse the whole field of the debate which, in many respects, could be more appropriately dealt with on the Question, "That the Clause stand part of the Bill." I want, if I can, to bring the Committee to an understanding and appreciation of these Amendments and of the Government's attitude to the proposals before us.
The right hon. Member for Bexley (Mr. Heath), in moving the first of these Amendments, made considerable play, as, indeed, other hon. Members have, with what they say is the harm and damage which has been occasioned by the temporary import surcharge in many various respects to which they have alluded, and said that it is in order that that harm and damage may be limited and removed as quickly as may be that it is desirable to put a limit upon the term of the surcharge by the Amendments which have been proposed.
I only want to say, first of all, that in introducing this surcharge—and I want to make it abundantly clear—the Government had no illusions whatsoever but that it was bound to inflict some hurt, that it was bound to create concern, anxiety—if hon. Members like—in the manner of its application, some inevitable degree of misunderstanding or doubt, and soreness, even on the part of our friends, and particularly our friends in E.F.T.A. I want to say most emphatically that while, perhaps, all the soreness has not been removed and that there still remain, naturally enough, aspects of concern among our friends overseas, to describe the present situation as one in which confidence in this country has been completely shattered is a gross exaggeration.

Mr. Burden: What I would suggest the Government ought also to realise is


that the impact of this surcharge has not yet come upon those countries, because there were forward orders covering the period since the surcharge was imposed, and it is only after those orders presently in the factories have dried up that the full effects will be felt in the countries upon which we have placed the surcharge.

Mr. Redhead: The hon. Gentleman has only repeated what he said before, and I in my turn want to repeat that to suggest that the measure of concern which may well exist about this import surcharge can be correctly assessed as meaning that confidence in this country has been completely shattered is indeed a gross exaggeration.
It has been my privilege and opportunity in these last few weeks to meet not only Ministers of some overseas Governments who have been here to talk about this matter but the representatives of many industrialists, manufacturers and exporters from those countries, and while I do not pretend for a moment that they have not perfectly natural anxieties about the matter—anxieties which we fully appreciate—I have found that, on the whole, they are exceedingly understanding about the situation, that they are still well-disposed towards this country, and quite a number of them have been ready to admit, when the situation and the purpose of this has been explained to them, that they might well have found themselves in a comparable situation if they had faced the same facts. Indeed, the most impressive thing in the minds of most of us is something which I think we must all bear in mind, that whatever may be the transient hurt or the irksomeness of this measure, either to our own people or to our overseas friends, in the long run it would be a greater hurt if the situation which gave rise to this measure were not remedied and healed as quickly as may be.
I submit that the real source of harm and damage to our economy, and whatever harm or doubts there may be overseas, lies in the situation which was inherited by this Government, and not in the admittedly unpalatable medicine which has had to be applied, for when an ailment is ignored and neglected, and neglected for a long time, there is always the tendency for the development of an acute disease, and, in consequence, the

application of the requisite medicine and surgery is often very unpleasant and very unpalatable.
The right hon. Gentleman clearly stated the effect of the Amendment. I am bound to say, however, that I was not persuaded by his solicitous desire to help the Government. I wish that I could believe that, but he does no service to the Government or, indeed, to the country by placing, as he and some of his hon. Friends did, such unwarranted emphasis on the protectionist character of this import surcharge. This can only be calculated to excite suspicion, where suspicion is now being allayed, that fundamentally this does lie at the root of this measure. It has been said time and again, and I repeat it now, that such is not the purpose of this measure, and that all the actions of the Government in the future in this regard will be directed to making it abundantly clear that that is not its purpose.
As I understand it, the Amendment seeks to put a term to the import charge—I hope that the right hon. Gentleman will accept this—to give a closer definition than he found in the Bill to the expression "temporary" which has so far been used in this connection. There is one very surprising thing about the whole of this debate. Not one hon. Member who has spoken has taken note of the fact that subsections (11) and (12) do not in themselves determine the duration of the charge. They merely determine the duration of the powers to impose the charge, and it is necessary, therefore, not merely to take account of the dates mentioned in those two subsections but to take account of subsection (9), too.
The right hon. Gentleman asked for some indication of the Government's intentions. I can only repeat—and this is a genuine expression of intention—that the Government will not keep this surcharge on for one moment longer than is necessary, for one moment beyond the period when the balance of payments position has so improved as to make it possible to remove or to abate the charge.
It is for that reason, therefore, that while the Bill provides the power to impose that charge—and that power will lapse in November, 1965, unless renewed by an Order in a year's time, subject to the approval of the House of Commons


in draft—under subsection (9) there is a power to reduce the coverage of the scheme and/or the rate of the charge so that the incidence of the scheme can be lightened or the charge abolished by Order at any time.

8.45 p.m.

Mr. Birch: What the hon. Member is saying is that the surcharge will be maintained as long as the Government consider it to be necessary. Does that mean that he does not support what the Foreign Secretary and the President of the Board of Trade said at Geneva, when they definitely referred to a "matter of months"? A matter of months is not a year.

Mr. Redhead: What I am saying is that if it becomes possible to abate or remove this surcharge in a matter of months the power to do so exists already in subsection (9), by way of an Order, and there is no need for the Amendments. These Amendments refer to Clauses which put a duration upon the power but not upon the charge itself. In other words, the Amendments are quite unnecessary, in the sense that the maximum duration of the powers as provided by the Bill in no way prejudices the assurance that the Government have given that they will address themselves to a review of the surcharge within a matter of months.
I suggest that no one could possibly expect an absolutely close forecast of precisely when it will be possible to remove this surcharge. It would not be reasonable to expect that. The Bill provides that if the Government cannot see their way clear completely to abolish the surcharge within a limited time, the House, in the first instance, shall have an opportunity to debate the matter by way of the submission by a draft Order and, in the second place, if it goes beyond the final date it will be necessary to consider fresh legislation. But the provisions in the Bill are long-stop provisions—provisions which set a time limit of one year and two years respectively.

Mr. Peter Emery: Temporary!

Mr. Redhead: Temporary within the ambit of long-stop provisions.

Mr. Emery: I am sorry to interrupt the hon. Gentleman. He did not interrupt

me when I was speaking, and I am grateful to him for giving way, but whenever possible we must define matters clearly, and the Minister has referred to a period of two years. That is a terrifying proposition to go out from this House. I shall be glad if he will make it absolutely clear that it is not the Government's intention that a temporary provision shall at any time be in force for longer than merely a matter of months.

Mr. Redhead: I made it perfectly clear that in the unhappy event of its not being possible to remove this surcharge by November, 1965, it could be extended only by way of a fresh debate, when the House will have an opportunity of considering the matter. This is not an indication either of hope or intention; it is a realistic proposal whereby, in the light of the circumstances, provisions can be made to retain this power but not necessarily to exercise it. The power clearly exists under subsection (9) to reduce or abolish the surcharge at any time, by Order, within the outside time limits of the Bill.
The alternative proposed by the Amendment would compel the House to debate this matter again in March, 1965. It might well be that the degree of progress and the improvement in the situation that could be seen by then would render it entirely unnecessary for the matter to be debated at all, because it would then be possible to invoke the powers under subsection (9). Within the ambit of their intentions, the Government will use that power.

Mr. Gower: Why does the right hon. Gentleman find it so objectionable that the House should debate it again in March, 1965? Why is that such a repugnant prospect—that there should be a debate so that the House should reconsider it?

Mr. Redhead: I did not say that it was repugnant. I said that it was unnecessary, because if the circumstances exist whereby this charge can be abated or abolished, then the power exists in this Bill and it is the full intention of the Government to utilise that power. There is no advantage in the Amendments that are proposed. They give no advantage, because that power that is not already in the Bill.
For that reason I suggest to the Committee that the Amendments are unnecessary, and, quite obviously, hon. Members who have taken part in this debate just have not appreciated the significance of Clause 3(9). No hon. Member has made any reference to it at all in the whole course of the debate. Believing that, I ask the Committee to reject the Amendments before us.

Sir Herbert Butcher: We are all grateful to the right hon. Gentleman the Minister of State for his clear explanation of what it is possible to do under Clause 3(9). He will forgive me saying so, however, but his explanation was little clearer than the actual words of the subsection itself. What was quite obvious was that the Treasury may in various ways make orders reducing or revoking, in whole or in part, the surcharges now imposed, and that they shall be made under subsection (9, b) by statutory instrument, subject to annulment. But these statutory instruments will be in the narrowest possible terms. They could, for example, reduce the surcharge on imported timber from 15 per cent. to 12½ per cent. and that would be the sole matter that the House would be capable of discussing at that time.
This is why I support the Amendment. There are two Amendments before the Committee, and if the Government prefer the Amendment in the names of members of the Liberal Party, I dare say that they could be accommodated. But that would have the disadvantage of ensuring a debate after a Budget instead of before it. The advantage of the first Amendment is that at a time when these surcharges have been in operation for five months, a debate takes place in this House and the Government have to come before us and secure a renewal of their powers. As the Bill is drawn at present this matter need not come before the House again until some time just prior to the end of November, 1965. It is right that these matters should be reviewed before then, and I am surprised that hon. Gentlemen opposite did not welcome an opportunity to take part in a further debate on this subject.
The Government have been supported this afternoon by three speakers. The hon. Member for Lichfield and Tam-worth (Mr. Snow) made a most attractive

speech on a basis which was, to paraphrase, "We can override the wishes of these people, our partners in E.F.T.A., because we are so valuable and important a market that they cannot do anything about it". The two other hon. Members who spoke—the hon. Member for Ebbw Vale (Mr. Michael Foot) and the hon. Member for Nelson and Colne (Mr. Sydney Silverman)—did not speak in any way like that. I listened carefully to both speeches and there was no suggestion at all, no word of regret, that we are breaking our pledged word to our partners in E.F.T.A. These hon. Gentlemen had a look over their shoulders. They looked for the ordinary rebels inside the party and said, "This is the place where loyal, faithful party men must stand up and support Government policy". We congratulate them on their loyalty to the party. The next time they appear before a disciplinary committee, may it be remembered in their favour.

Mr. Heath: We welcome the reply of the Minister of State. As he said, it has been a long debate covering a fairly wide field and I do not propose to go over it all. There are one or two main points which I should like to mention before I come to the remarks of the Minister.
The hon. Member for Lichfield and Tamworth (Mr. Snow) made an interesting speech. The logical conclusion of its general tenor was that we ought to abandon the multilateral trading system and try to create a bilateral trading system with those countries where we thought the advantage would be the greatest. The hon. Gentleman omitted to mention those countries where we have a favourable balance of trade, as is inevitable with a multilateral trading system. We have to decide whether to continue a multilateral trading system and ensure that the economy is competitive and efficient or try to proceed with a bilateral trading system and to strike equal bargains with other countries. All our experience since 1945 has pointed to the advantages of a multilateral trading system and I believe that we should continue in that way.
The hon. Member for Nelson and Colne (Mr. Sydney Silverman) asked about the policy which should be followed. If he looks at the speech made in Swansea by the Prime Minister


on 25th January he will see that the right hon. Gentleman set out clearly the policy which in his view ought to be followed, and it was exactly the policy of my right hon. Friend the former Chancellor of the Exchequer. In case of balance of payment difficulties we should draw on all the international reserves available to us, and secondly, if necessary, we should use short-term interest rates. The right hon. Gentleman has found himself forced to do both.

Mr. Sydney Silverman: Is the right hon. Gentleman really saying to the Committee that a policy which may have been right in January, 1964, ought not to have been affected in the last year by the catastrophic trend of events between January, 1964, and November, 1964?

Mr. Heath: It is the use of such words as "catastrophic" by the hon. Gentleman and his friends which has got them very largely into the mess in which they are now. The Prime Minister was at that time addressing himself precisely to the problems which he foresaw would arise during 1964. He answered at that time with a serious economic speech in which he stated the policy I described.

Mr. Sydney Silverman: I may have used too dramatic a word and I concede that for the sake of the argument—though I do not myself think so. Whether it was "catastrophic" or whether some other pejorative adjective would have been more appropriate, is the right hon. Gentleman really saying that the position in November, 1964, was so similar to the position in January, 1964, that a policy announced in January, 1964, ought not to have been affected or modified by it?

Mr. Heath: I am saying that the Prime Minister specifically addressed himself to the problems which would arise during 1964, throughout the whole year. This policy had been set out by my right hon. Friend the Member for Barnet (Mr. Maudling) and it was a perfectly logical and sensible thing for the Prime Minister to discuss in his Swansea speech. He did it with great deliberation and great skill. It was later at Norwich that he started to turn it into political terms.
The hon. Member for Ebbw Vale (Mr. Michael Foot) spoke with his usual

eloquence and I was flattered by the attention which he paid to me. The hon. Gentleman dealt with aspects of this matter which I think are to be regretted. The old tag used to be, "If you have no case, abuse the attorney". It has now become, "If you have no case, impugn the other fellow's patriotism". This is to be deplored. All hon. Members greatly value the good name of our country. The fact that one points out things that have caused harm to that good name is in no way to impugn the patriotism of anybody. I hope that in this House we shall abandon the impugning of the other fellow's patriotism.
9.0 p.m.
The Minister of State produced an answer which was far from satisfactory. I assure him, with respect, that my hon. Friends and I had read Clause 3(9) most carefully. No hon. Member on either side of the Committee mentioned it simply because no one except the Minister thought that it was particularly relevant. With respect, the rest of the Committee is right. It is not relevant to the Amendment because we all recognise that the Government, if they so wish, can abolish the surcharge, reduce it or change it by order.
The Amendment is designed to take the Chancellor at his word, when he said that it would last for only a matter of months, and to ensure that the Government will bring the matter before Parliament for full consideration before the end of March. We believe that that is desirable and I regret that the Minister did not address himself to that point.
I asked him to tell us what information had been given to other countries about the surcharge. He did not give that information and he did not say whether any undertakings had been given about the period involved. My hon. Friends have pointed out the difficulty of getting information about the figures the Chancellor has already given. Having been in the House of Commons for 15 years I can honestly say that it has never been more difficult to get information out of a Government than it has been from this Government. [Interruption.] Everybody except the House of Commons seems to have this information.
I am afraid, therefore—since the Minister ignored this point, since the Chancellor said that it would last for only a matter of months and since we consider it desirable that the Government should bring the matter to the attention of Parliament before the end of March—that I must advise my hon. Friends

to register our disapproval in the Lobby.

Question put, That "November" stand part of Finance the Clause: —

The Committee divided: Ayes 223, Noes 198.

Division No. 19.]
AYES
[9.2 p.m.


Abse, Leo
Gourlay, Harry
Monslow, Walter


Albu, Austen
Gregory, Arnold
Morris, Charles (Openshaw)


Allaun, Frank (Salford, E.)
Griffiths, David (Rother Valley)
Morris, John (Aberavon)


Alldritt, W. H.
Griffiths, Rt. Hn. James (Llanelly)
Murray, Albert


Allen, Scholefield (Crewe)
Hale, Leslie
Neal, Harold


Armstrong, Ernest
Hamilton, James (Bothwell)
Newens, Stan


Atkinson, Norman
Hamilton, William (West Fife)
Noel-Baker, Francis (Swindon)


Bagier, Gordon A. T.
Hamling, William (Woolwich, W.)
Noel-Baker,Rt.Hn.Philip(Derby,S.)


Barnett, Joel
Harper, Joseph
Norwood, Christopher


Baxter, William
Hayman, F. H.
Oakes, Gordon


Beaney, Alan
Hazell, Bert
Ogden, Eric


Bellenger, Rt. Hn. F. J.
Heffer, Eric S.
O'Malley, Brian


Bence, Cyril
Henderson, Rt. Hn. Arthur
Orme, Stanley


Benn, Rt. Hn. Anthony Wedgwood
Herbison, Rt. Hn. Margaret
Oswald, Thomas


Bennett, J. (Glasgow, Bridgeton)
Hobden, Dennis (Brighton, K'town)
Owen, Will


Bishop, E. S.
Holman, Percy
Page, Derek (King's Lynn)


Blackburn, F.
Horner, John
Palmer, Arthur


Blenkinsop, Arthur
Houghton, Rt. Hn. Douglas
Pannell, Rt. Hn. Charles


Boardman, H.
Howarth, Harry (Wellingborough)
Pargiter, G. A.


Bowden, Rt. Hn. H. W. (Leics S. W.)
Howarth, Robert L. (Bolton, E.)
Pavitt, Laurence


Boyden, James
Hoy, James
Pearson, Arthur (Pontypridd)


Braddock, Mrs. E. M.
Hughes, Cledwyn (Anglesey)
Pentland, Norman


Bradley, Tom
Hughes, Emrys (S. Ayrshire)
Popplewell, Ernest


Bray, Dr. Jeremy
Hughes, Hector (Aberdeen, N.)
Probert, Arthur


Broughton, Dr. A. D. D.
Hunter, Adam (Dunfermline)
Pursey, Cmdr. Harry


Brown, Hugh D. (Glasgow, Provan)
Hunter, A. E. (Feltham)
Rankin, John


Brown, R. W. (Shoreditch &amp; Fbury)
Irving, Sydney (Dartford)
Redhead, Edward


Buchan, Norman (Renfrewshire, W.)
Jackson, Colin
Rhodes, Geoffrey


Buchanan, Richard
Janner, Sir Barnett
Richard, Ivor


Butler, Herbert (Hackney, C.)
Jeger, George (Goole)
Roberts, Albert (Normanton)


Carmichael, Neil
Jeger,Mrs.Lena(H'b'n&amp;St.P'cras,S.)
Roberts, Goronwy (Caernarvon)


Carter-Jones, Lewis
Jenkins, Rt. Hn. Roy (Stechford)
Robertson, John (Paisley)


Coleman, Donald
Jones, Dan (Burnley)
Rose, Paul B.


Crawshaw, Richard
Jones,Rt.Hn.SirElwyn(W.Ham,S.)
Ross, Rt. Hn. William


Cronin, John
Jones, J. Idwal (Wrexham)
Rowland, Christopher


Cullen, Mrs. Alice
Jones, T. W. (Merioneth)
Sheldon, Robert


Dalyell, Tam
Kelley, Richard
Shinwell, Rt. Hn. E.


Davies, G. Elfed (Rhondda, E.)
Kenyon, Clifford
Shore, Peter (Stepney)


Davies, Harold (Leek)
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)


Davies, Ifor (Gower)
Lawson, George
Short, Mrs. Renée (W'hampton, N. E.)


Davies, S. O. (Merthyr)
Leadbitter, Ted
Silkin, John (Deptford)


de Freitas, Sir Geoffrey
Ledger, Ron
Silkin, S. C. (Camberwell, Dulwich)


Delargy, Hugh
Lee, Rt. Hn. Fredrick, (Newton)
Silverman, Julius (Aston)


Dell, Edmund
Lever Harold (Cheetham)
Silverman, Sydney (Nelson)


Dempsey, James
Lever L. M. (Ardwick)
Slater, Mrs. Harriet (Stoke, N.)


Diamond, John
Lewis, Ron (Carlisle)
Slater, Joseph (Sedgefield)


Dodds, Norman
Lomas, Kenneth
Small, William


Doig, Peter
Loughlin, Charles
Smith, Ellis (Stoke, S.)


Driberg, Tom
Mabon, Dr, J. Dickson
Snow Julian


Dunn, James A.
McBride, Neil
Solomons, Henry


Dunnett, Jack
MacDermot, Niall
Spriggs, Leslie


Edwards, Rt. Hn. Ness (Caerphilly)
McGuire, Michael
Stonehouse, John


Edwards, Robert (Bilston)
McInnes, James
Stones, William


English, Michael
McKay, Mrs. Margaret
Summerskill, Dr. Shirley


Ennals, David
MacKenzie, Gregor (Rutherglen)
Swain, Thomas


Ensor, David
McLeavy, Frank
Swingler, Stephen


Fernyhough, E.
MacMillan, Malcolm
Symonds, J. B.


Finch, Harold (Bedwellty)
MacPherson, Malcolm
Taylor, Bernard (Mansfield)


Fitch, Alan (Wigan)
Mahon, Peter (Preston, S.)
Thomas, George (Cardiff, W.)


Fletcher, Sir Eric (Islington, E.)
Mahon, Simon (Bootle)
Thomas, Iorwerth (Rhondda, W.)


Fletcher, Ted (Darlington)
Mallalieu,J.P.W.(Huddersfield,E.)
Thomson, George (Dundee, E.)


Fletcher, Raymond (Ilkeston)
Manuel, Archie
Thornton, Ernest


Foley, Maurice
Mapp, Charles
Tinn, James


Foot, Michael (Ebbw Vale)
Mendelson, J. J.
Tuck, Raphael


Fraser, Rt. Hn. Tom (Hamilton)
Mikardo, Ian
Urwin, T. W.


Freeson, Reginald
Millan, Bruce
Varley, Eric G.


Galpern, Sir Myer
Miller, Dr. M. S.
Wainwright, Edwin


Garrow, A.
Milne, Edward (Blyth)
Walden, Brian (All Saints)


Ginsburg, David
Molloy, William
Walker, Harold (Doncaster)




Wallace, George
Willey, Rt. Hn. Frederick
Winterbottom, R. E.


Warbey, William
Williams, Alan (Swansea, W.)
Woodburn, Rt. Hn. A.


Watkins, Tudor
Williams, Mrs. Shirley (Hitchin)
Woof, Robert


White, Mrs. Eirene
Williams, W. T. (Warrington)



Whitlock, William
Willis, George (Edinburgh, E.)
TELLERS FOR THE AYES:


Wilkins, W. A.
Wilson, William (Coventry, S.)
Mr. McCann and Mr. Grey.




NOES


Agnew, Commander Sir Peter
Giles, Rear-Admiral Morgan
Miscampbell, Norman


Alison, Michael (Barkston Ash)
Gilmour, Sir John (East Fife)
Mitchell, David


Astor, John
Goodhew, Victor
Monro, Hector


Atkins, Humphrey
Gower, Raymond
More, Jasper


Awdry, Daniel
Grant, Anthony
Morgan, W. G.


Baker, W. H. K.
Griffiths, Peter (Smethwick)
Morrison, Charles (Devizes)


Barlow, Sir John
Grimond, Rt. Hn. J.
Mott-Radclyffe, Sir Charles


Bell, Ronald
Hall, John (Wycombe)
Murton, Oscar


Bennett, F. M. (Torquay)
Hall-Davis, A. G. F.
Nicholls, Sir Harmar


Berkeley, Humphry
Hamilton, Marquess of (Fermanagh)
Noble, Rt. Hn. Michael


Berry, Hn. Anthony
Harris, Reader (Heston)
Nugent, Rt. Hn. Sir Richard


Bessell, Peter
Harrison, Col. Sir Harwood (Eye)
Onslow, Cranley


Biffen, John
Hawkins, Paul
Osborn, John (Hallam)


Biggs-Davison, John
Hay, John
Osborne, Sir Cyril (Louth)


Bingham, R. M.
Heald, Rt. Hn. Sir Lionel
Page, John (Harrow, W.)


Birch, Rt. Hn. Nigel
Heath, Rt. Hn. Edward
Page, R. Graham (Crosby)


Black, Sir Cyril
Hendry, Forbes
Pearson, Frank (Clitheroe)


Blaker, Peter
Higgins, Terence L.
Percival, Ian


Bowen, Roderic (Cardigan)
Hiley, Joseph
Pickthorn, Sir Kenneth


Box, Donald
Hirst, Geoffrey
Pitt, Dame Edith


Boyd-Carpenter, Rt. Hn. J.
Hornby, Richard
Pounder, Rafton


Braine, Bernard
Hornsby-Smith, Rt. Hn. Dame P.
Powell, Rt. Hn. J. Enoch


Brewis, John
Howard, Hn. G. R. (St. Ives)
Prior J. M. L.


Brinton, Sir Tatton
Howe, Geoffrey (Bebington)
Pym, Francis


Bromley-Davenport.Lt.-Col.Sir Walter
Hunt, John (Bromley)
Ramsden, Rt. Hn. James


Brooke, Rt. Hn. Henry
Hutchison, Michael Clark
Rawlinson, Rt. Hn. Sir Peter


Brown, Sir Edward (Bath)
Irvine, Bryant Godman (Rye)
Redmayne, Rt. Hn. Martin


Buchanan-Smith, Alick
Jenkin, Patrick (Woodford)
Renton, Rt. Hn. David


Buck, Antony
Jennings, J. C.
Ridsdale, Julian


Bullus, Wing Commander Eric
Johnston, Russell (Inverness)
Roberts, Sir Peter (Heeley)


Burden, F. A.
Jones, Arthur (Northants, S.)
Rodgers, Sir John (Sevenoaks)


Butcher, Sir Herbert
Jopling, Michael
Roots, William


Campbell, Gordon
Kaberry, Sir Donald
Scott-Hopkins, James


Carlisle, Mark
Kerby, Capt. Henry
Sharples, Richard


Carr, Rt. Hn. Robert
Kerr, Sir Hamilton (Cambridge)
Shepherd, William


Cary, Sir Robert
Kershaw, Anthony
Sinclair, Sir George


Channon, H. P. G.
Kilfedder, James A.
Smyth, Rt. Hn. Brig. Sir John


Chataway, Christopher
Kimball, Marcus
Spearman, Sir Alexander


Chichester-Clark, R.
King, Evelyn (Dorset, S.)
Stainton, Keith


Clark, William (Nottingham, S.)
Kitson, Timothy
Stanley, Hn. Richard


Cooke, Robert
Lagden, Godfrey
Summers, Sir Spencer


Cooper-Key, Sir Neill
Lambton, Viscount
Talbot, John E.


Costain, A. P.
Lancaster, Col. C. G.
Taylor, Edward M.(G'gow,Cathcart)


Courtney, Cdr. Anthony
Langford-Holt, Sir John
Taylor, Frank (Moss Side)


Craddock, Sir Beresford (Spelthorne)
Legge-Bourke, Sir Harry
Thatcher, Mrs. Margaret


Crawley, Aldan
Lloyd,Rt.Hn.Geoffrey(Sut'nc'dfield)
Thomas, Sir Leslie (Canterbury)


Cunningham, Sir Knox
Lloyd, Rt. Hn. Selwyn (Wirral)
Thompson, Sir Richard (Croydon, S.)


Curran, Charles
Loveys, Walter H.
Thorneycroft, Rt. Hn. Peter


Currie, G. B. H.
Lubbock, Eric
Tilney, John (Wavertree)


Davies, Dr. Wyndham (Perry Barr)
Lucas, Sir Jocelyn
Turton, Rt. Hn. R. H.


Dean, Paul
Lucas-Tooth, Sir Hugh
Tweedsmuir, Lady


Deedes, Rt. Hn. W. F.
McAdden, Sir Stephen
van Straubenzee, W. R.


Digby, Simon Wingfield
Mackenzie, Alasdair (Ross&amp;Crom'ty)
Walters, Dennis


Dodds-Parker, Douglas
Mackie, George Y. (C'ness &amp; S'land)
Ward, Dame Irene


Donaldson, Cmdr. C. E. M.
McLaren, Martin
Weatherill, Bernard


du Cann, Edward
McMaster, Stanley
Whitelaw, William


Eden, Sir John
McNair-Wilson, Patrick
Williams, Sir Rolf Dudley (Exeter)


Emery, Peter
Maginnis, John E.
Wills, Sir Gerald (Bridgwater)


Fell, Anthony
Maitland, Sir John
Wilson, Geoffrey (Truro)


Fletcher-Cooke, Charles (Darwen)
Marlowe, Anthony
Wolrige-Gordon, Patrick


Forrest, George
Marten, Neil
Wood, Rt. Hn. Richard


Foster, Sir John
Mathew, Robert
Woodhouse, Hn. Christopher


Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)
Mawby, Ray
Woodnutt, Mark


Galbraith, T. G. D.
Maxwell-Hyslop, R. J.
Wylie, N. R.


Gammans, Lady
Maydon, Lt.-Cmdr. S. L. C.



Gardner, Edward
Meyer, Sir Anthony
TELLERS FOR THE NOES:


Gibson-Watt, David
Mills, Peter (Torrington)
Mr. Batsford and Mr. Ian Fraser.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Mr. Charles Loughlin: On a point of order. Is it in order for a Member to stand behind the Bar and shout "No" when the Question is put?

The Chairman: It is not in order for an hon. Member to stand behind the Bar and shout "No".

Sir Rolf Dudley Williams: On a point of order. In view of the fact that there was some confusion, could the Question be put again?

Mr. Godfrey Lagden: rose—

The Chairman: Order. The hon. Member for Hornchurch (Mr. Lagden) must wait until I have dealt with one point of order before I deal with another. The answer to the hon. Member for Exeter (Sir Rolf Dudley Williams) is that I do not propose to put the Question again. The Question has been put, and I said that the "Ayes" had it.

Mr. Lagden: Further to that point of order. I was wondering, Dr. King, if, in the excitement and uproar which was caused over here, you heard a Member, namely, myself, who was in the Committee shout "No"?

The Chairman: May I assure the hon. Gentleman that I did hear the hon. Members who were in the Committee say "No". As a matter of fact, the Chairman often hears more than the hon. Gentleman thinks he hears.

Mr. Sydney Silverman: Further to that point of order, Dr. King. Having regard to the tradition of the House of Commons in protecting the rights of minorities, even when a minority is a minority of two, do you not think that the hon. Gentlemen who wanted to shout "No" might be given the opportunity to do so and show up the rest of their colleagues who speak against measures but do not express their opinions by a vote?

The Chairman: I am not sure whether the hon. Gentleman's memory is at fault. The hon. Members who desired to say "No" were given the opportunity and did say "No" when I collected the voices.

Clause 4.—(GOODS EXEMPTED FROM DUTY.)

Mr. Edward du Cann: I beg to move Amendment No. 19, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on goods in transit to the United Kingdom on 26th October 1964 from a source outside the United Kingdom.

The Chairman: I think that it would be for the convenience of the Committee if we were to discuss with this Amendment the following four Amendments: Amendment No. 13, in Clause 3, page 2, line 41, after "Kingdom" to insert:
 with the exception of any goods for which bills of lading specifying a British port of entry had been despatched by an exporter to the United Kingdom before 27th October 1964 ".
Amendment No. 14, in Clause 3, page 3, line 43, to leave out subsection (8).
Amendment No. 20, in Clause 4, page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on goods for which a contract has been entered into before 27th October 1964, expressly or impliedly making the buyer liable to purchase the goods specified at an agreed price.
Amendment No. 22, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on goods for which part-payment of not less than 25 per cent. has been made before 27th October 1964.

Mr. du Cann: Yes, Dr. King; I am obliged.
I shall try to deal with the point raised by these Amendments fairly shortly, without in any way, I hope, leading the Government to suppose that we take the matter lightly. Quite the reverse—we take it very seriously indeed.
Amendments Nos. 19 and 14 are, basically, alternative. Amendment No. 19 deals with the position when a contract has been entered into before 27th October, 1964, that is, the date from which the surcharge is run, and Amendment No. 14 is alternative to that since acceptance of No. 19 would remove the need for subsection (8) which ensures that, whatever contracts have been entered into, the burden of the surcharge falls on the United Kingdom buyer. However, I hope that the Government's attitude will be sympathetic towards the main point which we are putting forward under the umbrella of Amendment No. 19.
Amendment No. 13, the Liberal Party's Amendment, is to some extent on the same point as Amendment No. 19, and it seems to us to be an added indication of the general support there is in the Committee and, perhaps, also in the country for the point which we are advancing.
As the Bill stands, goods under contract before 27th October will have to be imported regardless of the surcharge. Specific agreements have been made, and the goods will come in whether there is the surcharge or not. Two consequences flow from this. First, in such cases the surcharge is not achieving its objective, which, presumably is to reduce imports. That is what we have been told on more than one occasion, first, in the White Paper and thereafter in debates in the House. The second consequence is that manufacturing costs and prices all down the line in respect of the particular class of goods will be increased to no practical purpose whatever.
Proof of the existence on 27th October of a binding contract would not be difficult to produce. The Liberal Amendment has suggested a highly practical way of doing it. The Government may think that that method is not entirely suitable, but, if I may presume to speak for the Liberal Party as well as for my right hon. and hon. Friends, I am sure that we should not mind what method was adopted provided that one were found, as, in equity, it should be. We believe that it is perfectly simple to find a method. Here is one. There may be others. Let the Government choose what they regard as appropriate.
Administrative machinery to check the validity of submissions for exemption would have to remain in existence for only a short time. What we propose would be easy to do and, second, it would not require the establishment of a complicated apparatus which would have to remain in existence for months and months. It would be a once-for-all operation and very quick.
The cost to the Government in loss of surcharge by the exempting of imports of this kind could not be very great, and it would present no argument for not doing what we suggest. It would be a once-for-all cost, and, judging from pre-

vious Government statements, revenue raising was not, in any case, the main reason for the introduction of the surcharge.
I refer now to something said by the Financial Secretary in his maiden speech at the Dispatch Box, if I may so describe it, which we very much enjoyed on 24th November. I fancied myself back in court at one point, but that did not detract from the attention which we paid to his remarks. The hon. and learned Gentleman said:
 It is essential, if this charge is to operate, that it should bite and bite at once, and take effect at once."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1215]
That is entirely true if it is to deter imports, as we understand the object to be, but the effects of the surcharge will be judged by businessmen, if not by the Government, on its purely economic aspects. Penalising those whose goods must come in anyway, because the importers are bound by contract to import them will not affect the economic basis for any later decision about whether or not to import additional goods. Why should it? All it will do is merely annoy those who are bound by contract, and this is one factor out of many which has already affected confidence in the Government's intentions.
I could give many examples of the way in which individual firms are affected. I am sure that the Minister without Portfolio will not wish me to weary the Committee with detail. Many of my hon. Friends, and, I am sure, members of the Liberal Party could produce many examples of extreme irritation at this situation. I produce only one example, which, I admit, is extreme, from a steel company which says in a letter which some of us have received:
Imports cannot be halted because irrevocable letters of credit have been opened. The balance of payments is in no way improved, and the sole result will be that many firms like ourselves who cannot pass on price increases to their customers or to the general public because they are committed by firm contracts face financial ruin through absolutely no fault of their own.
"Financial ruin" may be too strong a term but to penalise in financial terms firms whose only crime is that they honourably entered agreements which they thought they would be able to keep in circumstances which existed at the


time, is going too far and there is an element of retrospection in this matter to which we object.
The object of Amendment No. 20 is to exempt goods in transit or not entered with Customs before 27th October. The arguments in favour of this Amendment I can again sum up briefly by saying, first, that it is customary, as the Minister will know, in raising import duties to give at least a week's notice. In this instance this was not done, with the result that numerous cases of hardship are being brought about. There is substantial evidence of this. I hope that the Minister will take it as read, but that it exists in good quantity there is no doubt. Including goods in transit or those which for one reason or another have not been entered with Customs before 20th October does nothing to reduce imports, but merely creates unnecessary hardship. As in the case of the other type of goods I referred to, costs and prices all down the line in respect of goods in transit will be raised to no purpose whatever.
The cost to the Government of accepting this Amendment on a once-for-all basis must be small. To return to what the Financial Secretary said on the fateful evening of 24th November, if I may speak like Edgar Lustgarten about so a criminal trial—for we have a heavy representation of the legal profession on the Government Front Bench at present:
it is imperative for the success of this scheme that we should establish that it is non-discriminatory and that we should establish that it is non-protective."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1215.]
I do not want to talk about it being non-protective, which it obviously is, whether we like it or not, but I shall discuss whether it is non-discrimatory.
The argument of the Financial Secretary was a largly hypothetical one. The fact that some goods coming from a great distance may be in transit for two or three months does not get round the fundamental point of the argument, which is that the object of the surcharge is to reduce imports. One might ask why the Government should be so concerned about discrimination in regard to this tiny matter when they completely fail to take into account what one might call world opinion by introducing the surcharge in the first place. To suggest, as he did, that discrimination cannot be justified

in this example when there is discrimination against exporters to Britain from all all over the world through the very introduction of this surcharge, seems to make no sense whatever.
Here we have two broad categories: those who entered into contracts before 27th October and those who have goods in transit. Both are categories of persons or firms which are entirely innocent and both are now to be put into difficulty and penalised by the action which the Government have taken. Many of us feel that this broad measure has not been too well thought out, as evidenced by the substantial number of Amendments already put down in the name of the Chancellor of the Exchequer and I hope the Government will be able to say tonight, "Yes, we agree there is a category of persons here whose interests should be looked at again and whose cases should be examined."
I do not think that anyone on this side of the Committee would be unhappy if the Government said that they could not accept the particular wording of this Amendment or that they wanted to do this in another way, but I hope very much that they will be reasonable in the matter and say to the Committee that they think there is good case here and they will be willing, if not to accept these Amendments, at least to table their own at a later stage. What is happening at the present in respect of goods in transit and under contract is not reducing imports but putting up prices unnecessarily and creating If the Government do not wish to accept these Amendments they must take the responsibility for doing these things and I suggest that it is a heavy one.

Sir H. d'Avigdor-Goldsmid: I hope I am not out of order in congratulating my right hon. Friend the Member for Taunton (Mr. du Cann) on his elevation. I listened to his speech and noticed that he used the word "ruin" and then withdrew it. I want to cross the t's and dot the i's a little more closely on this situation out of my own direct knowledge.
As hon. and right hon. Members opposite may or may not be aware, most important import business is not done directly between as it were sellers on the Continent and buyers in this country but


through the use of agents. It is a daily experience for me as a banker for one of those agents to come to me, possibly a man with very modest capital, and to say, "I want to open a letter of credit for £100,000 for sale from Germany", and I say to him, "What is going to happen to it?" He says, "I have a firm contract, from a buyer in England for this sale."
9.30 p.m.
If I am shown the buyer's contract and I am satisfied that the contract is firm and binding and I am satisfied with the bona fides of the agent, I am inclined to meet his request and open a letter of credit on his behalf for the amount of the purchase, because I know that when the goods arrive here—and they are fully insured—full payment will be received. But the agent has contracted at a firm price. He has contracted to his seller in Germany at one price and to his buyer here at a firm price.
There is no provision in any of these contracts for the interposition of a duty, of the sort we are now discussing, of 15 per cent. on the value of a contract. It may be argued that, though a very large and disqualifying impost, 15 per cent. does not mean ruin to the buyer. But it falls not on the ultimate consumer, but on the agent, who has firmly contracted to both the seller and the buyer and who expects to make a margin of perhaps 1 or 2 per cent. on a transaction of this magnitude, because he is dealing between two first-class principals.
As the Minister without Portfolio will appreciate, these are the facts of life. When my right hon. Friend the Member for Taunton used the word "ruin", he withdrew it, but there are cases when the word "ruin" would literally apply, cases when a firm with a capital of £10,000 has a contract of this sort and when the imposition of the 15 per cent. duty would mean £15,000 loss, which would be ruin to the firm which in good faith had contracted as an agent.

The Minister without Portfolio (Sir Eric Fletcher): indicated dissent.

Sir H. d'Avigdor-Goldsmid: I notice the hon. Gentleman shaking his head. I should be very grateful if he would tell me where I have gone wrong.

Sir E. Fletcher: Perhaps I should correct this misapprehension at once. Both the right hon. Member for Taunton (Mr. du Cann) and the hon. Gentleman have overlooked the fact that Section 10 of the Finance Act, 1901, in the case supposed by the hon. Gentleman protects the parties to the contract and enables the seller to pass on the impost to the buyer and enables him to pass it on to his buyer and so on down the chain, so that there is no question of any party being ruined.

Sir H. d'Avigdor-Goldsmid: I cannot say that my client has had access to Section 10 of the Finance Act, 1901, as the hon. Gentleman has had, and I doubt whether many hon. Members on either side of the Committee have consulted it. We have not had a reference to it before.

Sir E. Fletcher: I hesitate to interrupt again, but if the hon. Gentleman would look at Clause 3(8), he would see that Section 10 of the Finance Act, 1901, is not only expressly mentioned, but that its ambit and operation are extended by virtue of that subsection.

Sir H. d'Avigdor-Goldsmid: That is indeed a point for which I am grateful. It is a perfectly good point and would seem to do away with the argument which I was propounding. However, it does not in any way change the fact that although the agent may not suffer the loss, the ultimate buyer does, even if he is not ruined. I am very glad to have the hon. Gentleman's assurance that the agent does not suffer, but it does not in any way improve the position of the ultimate buyer.

Mr. Fletcher-Cooke: This difficulty has occurred more than once. It is due to a difference in the use of the word "agent" by a lawyer and a business man. A business man uses the word "agent" when he means "principal" and a lawyer uses the word "agent" when he means "agent". My hon. Friend will find that his agent is in law the principal in many cases, really the buyer, and he will therefore suffer a great loss because, although commercially he is an agent, legally he is a buyer, and under the Section mentioned by the hon. Gentleman, the loss will fall on him, although for practical purposes he is still an agent.

The Chairman: I do not think that it will help the Committee if we have triangular debates.

Sir H. d'Avigdor-Goldsmid: I am grateful to you, Dr. King, for your interposition, for I am the least suitable to take part in the legal struggle which we are now having between eminent members of the Bar. The fact is that there is a loss which will fall on the man who, although contracting as a principal, is in fact an agent and who obtained his credit because he had sold the goods on, as it were. I am glad to have the confirmation of the hon. Gentleman that he will not suffer. I do not suppose that my client will be in a position to brief the hon. Gentleman—he is probably not able to afford it—but, however that may be, the position is clearly doubtful, if we are to judge by the interposition of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke).

Sir E. Fletcher: indicated dissent.

Sir H. d'Avigdor-Goldsmid: The hon. Gentleman shakes his head. This is a matter of administrative convenience which raises very important problems. We have decided that this tax shall bite, I think the word is, from midnight of the day on which it was introduced. That has been done for reasons of administrative convenience. It is not proper that Her Majesty's subjects should suffer the sort of loss, if not ruin, which the Clause unamended would inflict, and I therefore hope that my hon. and right hon. Friends will do their best to convince the Government that this is an injustice which we ought not to tolerate.

Mr. Russell Johnston: I think that what is common to the Amendments which are being debated together is the restrospective effect of the Clause, and it is that to which hon. Members on this side of the Committee object. I shall not directly follow the right hon. Member for Taunton (Mr. du Cann) but concentrate very briefly on Amendment No. 22 and give a specific example. I shall not keep the Committee very long, but this is a point which I particularly want to make.
In my constituency we have an industrial project which occupied the attention of the House for quite a long time, the plup mill at Fort William. This is one of the very hopeful projects in the

North of Scotland, as hon. Members on both sides will know. This project is directly relevant to the Amendment, I assure you, Dr. King, and you may remember that this project attracted a loan of some £8 million which was to be interest-free to the end of 1966.

Mr. Snow: Was it not an interest waiver?

Mr. Johnston: The interest was waived to 1966 and the value was about £1·3 million.
The fact that this assistance was made with the agreement of both sides in this Chamber was an indication of the importance which hon. Members attached to the scheme. Certain machinery necessary in the work of the mill was purchased from abroad, from Sweden, because no similar machinery was made in this country. It was ordered way back in 1963 and by now some 30 per cent. of that machinery has been paid for. None the less, delivery has not yet been made. Therefore, all that machinery will now become subject to the 15 per cent. import charge.
I do not want to play politics, as the hon. Member for Ebbw Vale (Mr. Michael Foot) said, in any party sense at all. I have already had correspondence with the Board of Trade on this matter and I would not raise it now if I had received satisfaction on that occasion. I have no desire to embarrass the Government on a matter of this kind. I know they face a difficult situation, which I feel some hon. Members on this side of the Committee have tended to exploit. I quite understand that if the Government are going to make exemptions of a general character that would impair the effectiveness of the general measures they propose, but I think that if the Government were to accept my Amendment, No. 22, it would in no way impair the effectiveness of the import surcharge
My case is quite simple. To make this machinery subject to the import charge makes no sense at all in the terms in which the charge was levied or in the terms of regional development which the Government propose in the Highlands area. First, the object of the import surcharge is to save foreign exchange—in the words of the letter


which I received from the Board of Trade on 18th November,
 to achieve an immediate reduction of our import bill and so arrest the deterioration of our balance of payments".
But, in fact, no foreign exchange is being saved in this case. More than 30 per cent. of the machinery has already been paid for; the foreign exchange has already gone. The remainder is, naturally, subject to a firm contract.
Secondly, the value of the interest waiver, to which the hon. Member for Lichfield and Tamworth (Mr. Snow) drew my attention, of £1·3 million, which the House as a whole recognised as being necessary, will be reduced by the amount payable in import surcharge. This, again, does not seem to me to be logical. Thirdly—and I have only three points to make—I believe it ought to be taken into account that when the pulp mill is completed it will save in the first year of its operations three times the value of the foreign machinery in foreign exchange gained.
I would beg the Minister to look at this question again. I think it is a very special case indeed, and to make an exception in the case of the pulp mill, and in the case of other firms similarly situated, would not in any way impair the effectiveness of the Goverment's measures but would remove some very unreasonable and possibly damaging anomalies.

Mr. Anthony Fell: I shall take up only a very few minutes of the Committee's time, but I also have a case in my constituency—I am sure that almost everybody here has a case from his constituency—of somebody who will suffer because of this imposition. I understand the surcharge is not chargeable on raw materials. At least, it is supposed not to be, although there is some dispute as to what is a raw material and what is not. I presume that it is not be placed on raw materials because they are basic to manufacturing the goods which will be re-exported from this country. Now we come to the question of expensive machinery which is even more basic because it fashions raw materials into goods to be exported.
I have a constituent, who is known to an hon. Gentleman opposite as well,

because he is building a factory in the north of England, who got a contract for machinery for making paper sacks. This machinery is extremely expensive, and were it not for certain help which, I believe and am confident, he will receive from certain quarters to help with these difficulties, he would probably not be able to go ahead with building the factory, plus the fact that he is having to pay a surcharge on his raw material which is paper.
This puts people in the most difficult situation. I hope that the hon. Gentleman and the Financial Secretary will think about these things. It is all very well making fine legal points to people who try to argue in a commonsense way in this Committee, but it does not wash a lot with hon. Members.
I do not want to flatter the Government too much—I am much too modest to wish to do that—but I think that it would not be untrue to say that they have some regard for contracts, at any rate in principle, and that, despite anything that may occur to them to do themselves, they believe that contracts should be kept. At any rate, I am sure that they believe that other people should keep their contracts.
9.45 p.m.
I am sure that the Government do not want the position to arise in this country—I know that they do not wish to damage our industry—in which traders are literally forced to break contracts involving large sums of money with countries abroad who have already been offended by matters which it would not be fair to the Government to mention. This machinery comes from one of the countries which has already been offended in a way which I am too modest to describe in the presence of the Government.
I hope that the Government will look at this very seriously and consider whether they have now come to the conclusion that contracts should be honoured, or whether they really believe that it is a good thing for industry to be pushed into the position in which it is forced to break contracts.

Sir Richard Thompson: I do not want to repeat the general argument so well put by my hon. Friend—[HON. MEMBERS: "Right honourable."] I accept the correction,


and offer him my congratulations on this happy event—by my right hon. Friend the Member for Taunton (Mr. du Cann), because he has done it so well already.
I want to do what others have done, namely, to relate this problem to a case in my constituency. The firm I have in mind is very much affected by the proposed action of the Government. This firm is called DIAC (Aircraft) Limited, and it describes itself as prototype experimental production machinists and 3-D copying specialists, electronic and mechanical fabricators and assemblers. It may be that from that description hon. Members are not fully aware of what the firm does, so I shall try to put it in the plainest terms. It is a medium-sized firm employing about 170 people including the office staff, and is engaged in highly sophisticated production techniques mainly for the aircraft and electronic industries.
This firm has had on order—and I have a copy of the contract here—for the past eight months, for delivery during the next few weeks, a unique type of vertical milling machine called a copying mill. This machine will be associated with a completely automated tape path control system developed by Ferranti. [Laughter.] I do not think that there should he any ribaldry over that. This firm is unique in its achievements and has few competitors in the world. I welcome the fact that a firm in my constituency is so advanced in the automation field that it is capable of engaging in this type of work.
I am informed that this machine is absolutely unique. None exists in this country, or, indeed, outside the United States of America. The machine costs a little over £40,000, and if, as a result of this impost, my constituents were to seek to cancel the order, they would incur a penalty of £10,000 under the penalty clause. That is a considerable sum of money for a small-to-medium-sized company. It is certainly not a sum which it took into account when it entered into the contract. With the installation of this machine Diac Ltd. expects to reduce to about six months processes which at present take up to four years. The machine is fully automated, and requires no additional labour force to operate it.
As I have said, my constituents are engaged in some of the most highly experimental and sophisticated subcontract work, mainly for the aircraft industry, working on such projects as the VCIO and TSR2, and also the Concord, in association with SudAviation. They are working on the very frontiers of technology, making equipment not for the aircraft age but for the space age. Surely it is wrong, by means of this indiscriminate surcharge, to penalise people like this. An extra £6,000 on the cost of this machine is not something which this firm can easily swallow.
A Government who proclaim their devotion to science and technology, and their application to our industrial processes, ought not to act in this way. Here we see the application of science and technology to industry, and yet this firm will be penalised if this impost goes through in the form contemplated.
Furthermore, the Government want more exports and we are absolutely with them in this, but here we have equipment of immense export potential and significance, the installation of which is being made more costly and more difficult. Again, we understand that the Government want to encourage automation and the most efficient use of labour resources. Why, then, must we hamper re-equipment which serves this very end?
Finally, I understand it to be the objective of the Government to reduce by their fiscal policies the pressure of demand at home. None of the products which this firm will produce is of a consumption kind. With the aid of this machine the firm will not produce things to sell in the shops. Therefore, it cannot be said that by installing these machines the firm will add to the pressure of demand here. Perhaps the Government would prefer Diac Ltd. not to import this machine. Perhaps they would prefer it to take the hint that it will have to pay an extra 15 per cent., and call the whole thing off. But would the Government feel that the £30,000 also saved, after paying the penalty for default, was an adequate compensation for the loss of an export potential and the failure to modernise plant and equipment?
My right hon. Friend made the point that the surcharge is said to be temporary.


In recent days we have heard that its reduction, and possibly its total elimination, is to take place in a matter of months. We all hope that that is so, but if it is so, there is even less point in penalising the go-ahead, efficient firm, on which our industrial future depends, whatever the Government may be.
The truth is that we ought to be helping firms like this, not piling obstacles in their way. If the Minister could reconsider his proposals and work out a better set, we should be grateful. I do not profess to try to write them for him; I am only directing my arguments in favour of Amendment No. 20. If he could look at it again so that he could contrive a set of proposals which did not infringe nearly all the things which his Government believe in, I for one, on this side of the Committee, would be ready not to press this Amendment to a Division. I hope that, on reflection, the Minister will be able to say that he is taking this part of his proposals back to have another think about it and produce something less damaging to the progressive, efficient firms and to our national economy.

Mr. Bessell: I do not want to weary the Committee, so I shall be very brief, but I would like to support, as simply and as quickly and as strongly as I am able, the arguments deployed by the right hon. Member for Taunton (Mr. du Cann). If I may, in parenthesis, offer congratulations as one West Countryman to another, I should like to take this opportunity of doing so.
Amendment No. 13, which is in the names of my hon. and learned Friend the Member for Montgomery (Mr. Hooson) and myself, is merely a device. We accept the Amendment proposed by the Conservative Party, No. 19, but it has been suggested that there are very real difficulties in applying this exemption. Therefore, my hon. and learned Friend the Member for Montgomery and I decided that this might be a way of making possible to make this exemption without undue difficulty or embarrassment for Her Majesty's Government.
I have had considerable experience over many years of the import and export business, on both sides of the Atlantic,

and I am quite certain that by imposing this levy without warning upon all imported goods to this country with the exception of those which have appeared in the separate list, a great deal of hardship has been caused to a large number of small business people.
It is on that ground—perhaps only on that ground—that I would implore Her Majesty's Government to look at this matter again. It may well be that the larger companies can afford to take the loss, that they must accept to some extent the risks which are inherent in any business and which may occur at any time when new taxes or import duties are levied, but in this case it is an indiscriminate charge and it has caused a considerable hardship to a number of small business people, as I have stated.
I believe, therefore, that it would not only raise the stock of Her Majesty's Government in the country as a whole, but it would certainly be regarded as no less than an act of common justice if the Amendment—whichever Amendment it may be—can be accepted. Thus, many people will feel that their grievance has been removed, and I think that this would give great satisfaction to almost every section of the community.

Sir Harmar Nicholls: On a point of order. All the speeches that we have heard over the last half hour have been purely on trade. Is it within the power of the Committee to see to it that a Minister from the Board of Trade is here? There are Treasury Ministers present, but none from the Board of Trade.

The Chairman: The hon. Gentleman knows very well that that is not a matter for the Chair. It is not a point of order.
May I apologise to the hon. Gentleman I am going to call for not calling him earlier? I thought that he was merely seeking to interrupt the last speaker. Mr. Percy Holman.

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That the Proceedings of the Committee of Ways and Means may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Lawson.]

Orders of the Day — FINANCE BILL

Again considered in Committee.

Question again proposed, That the proposed words be there inserted.

Mr. Percy Holman: We have had a number of speeches dealing with individual firms and their difficulties which have arisen out of this special temporary impost of 15 per cent. on all manufactured or semi-manufactured goods. As an importer for the last 45 years I would say to the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that I am surprised that he had not a clause in his contract and on his quotation forms to the effect that any import charge should he on the buyer's account. I have seen that on the forms of many merchants and importers.
We are told of the difficulties relating to a particular machine for Messrs. Wiggins Teape. I hope that this firm is buying the bulk of its machinery in Great Britain. When I was a young man practically every paper-making machine in Scandinavia was a British product and there is no reason why a British firm, financed largely by help from the British Government, should not buy British in respect of a major part of its machinery.
We spend vast sums on research and it may be that this temporary impost may be unlucky in respect of a particular piece of machinery, but it may not be possible to obtain the machine during the period of the imposition of the surcharge. Most hon. Members opposite must have got a shock when they heard of the figure of our balance of payments deficit. I wish to apologise to my constituents for never mentioning a figure of more than about £450 million as the adverse trade balance. It is now turning out to be considerably in excess of that. I hope that it will not prove to be anything like £800 million, but it looks as though it will be £700 million.
The Government had to take rapid and drastic action. I have discussed

this matter for months past and long before the General Election. Quick action was necessary in an emergency. We destroyed the organisation which could have imposed quotas and action had to be indiscriminate and immediate because contracts are often signed for many months ahead. They can be broken, in most cases without any question of compensation. Several producers on the Continent have written to me saying that a number of orders were cancelled, although some were subsequently reinstated. I do not think that Messrs. Wiggins Teape need to be too unhappy about having to pay a little extra, because of this impost. Most of that company's paper has gone up by £4 a ton since the present Government took office. I can speak with knowledge of that.
The introduction of the 15 per cent. surcharge has been a nasty, unfortunate, but nevertheless necessary, act on the part of the Government and I can assure hon. Members opposite that I am a sufferer from it. A steamer was in collision while coming out of one of the Norwegian fiords, the result being that goods coming to a firm with which I am concerned arrived after the impost came into operation. I mention this to show that despite the adverse effect of the surcharge, I am prepared to stand by the Government's policy.
It should be realised that an impost of this description can be spread by firms over many months. It has the advantage of helping our export trade and I would like, if it were possible, bigger incentives to be given to exporters from the money which will be raised by this temporary impost. I regard the surcharge as an inevitable part of the heritage left by the party opposite. The Government realised that quick action was necessary, and thus the surcharge came into being.
Exemptions can be extremely unfair. It should be realised that contracts can be spread over anything from a month or two to 12 months and while some firms are unlucky in the hardships suffered by any Government policy, equal hardships arise with the establishment of quotas or any other method of restricting imports. I say "Good luck" to the Government because they have done the right thing in the right way.


Exemptions of one sort or another are either impracticable or unfair to other importers.

Mr. H. P. G. Channon: I do not take the same philosophical view of the 15 per cent. surcharge as the hon. Member for Bethnal Green (Mr. Holman). It is all very well for him to say that exemptions make hard law, so to speak, but the Government have completely given away any case of that description by themselves having tabled one Amendment after another to the Bill.
The hon. Member said that surcharges of this nature were absolutely essential and that no exemptions should be made. It is vital that they should be made. How can he possibly suggest that exemptions are unfair when the Government have themselves, for various reasons, no doubt all good, tabled Amendments to make exemptions? I submit that, although it may be true that many large firms may be able to absorb or offset the 15 per cent. surcharge, there are many small firms which will find the surcharge a severe shock indeed. The hon. Member was being less than fair to the smaller firms which are affected by it.
It is ironic that the Government should have called this a temporary surcharge. Many small firms which have been caught by contracts they cannot get out of are in an even worse position because they realise that had they waited six months or so they would not have suffered severe consequences resulting from the surcharge.
There is a case in my constituency, which I have referred to the Board of Trade, and, like my hon. Friend the Member for Peterborough (Sir Harmar Nicholls), I regret that we will not have the advice of a Board of Trade spokesman in the debate tonight. I hope that I will not be thought impertinent in saying that it always seems suspicious when a Government put up two lawyers to present a case. We have heard a good deal about the legal qualifications of the Minister without Portfolio in regard to the legal matters with which he will be involved, but this matter should surely be dealt with by a Board of Trade Minister.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): I thought that hon. Members opposite might be glad of some variety. I am the Minister who is responsible for matters concerned with Customs and Excise and, consequently, for this part of the Bill. The Committee had the advantage of hearing my hon. Friend the Minister of State, Board of Trade, and will now have the advantage of hearing my hon. Friend the Minister without Portfolio. Perhaps at a later stage in our proceedings they will have the tedium of listening to me, but I can assure them that there is always a responsible Minister present.

Mr. Channon: I am grateful to the Minister. I am sure that everyone is eagerly awaiting the speech of the Minister without Portfolio, because he always addresses us in such a charming and convincing way. If the Financial Secretary is responsible for this part of the Bill, it is extremely odd that my representations are answered by the Board of Trade and are not forwarded to him.

Sir Harmar Nicholls: Would my hon. Friend think it proper in his argument to say that the Minister of State, Board of Trade should be prepared to listen to arguments as well as to produce his own?

Mr. Channon: I am grateful to my hon. Friend. I am sure that he will agree with me that the fact that the Board of Trade has taken upon itself the burden of answering my representations when the Financial Secretary is responsible is another clear indication of the fact that the Government do not know who is responsible for what.
I hope that the Committee will forgive this somewhat frivolous start to my remarks, because I have a serious point to raise. I hope that the Minister without Portfolio will not think that I do not genuinely have a serious constituency point to put to him.
There is in my constituency a small firm—this matter affects small firms in particular—which has been caused extreme hardship. It is the importer of certain kinds of yarns which are obtainable in this country, but they are extremely difficult to obtain. There is a considerable waiting list and a considerable shortage of this type of yarn. It becomes virtually impossible for the firm


which wishes to import it to get the supplies that it wants.
To make matters worse, the margins in this trade are extremely tight. This firm has, for example, entered into an extremely tight contract to buy things abroad and to import and sell them at a fixed price which it has already negotiated. The 15 per cent. surcharge will make a very substantial difference to this concern, and even if it does not result in financial ruin it will come jolly close to it. This is only one of many examples of small firms which are genuinely hit by this surcharge.
What makes matters worse is the fact that the Government originally said that they would exempt raw materials. I do not think that what they have exempted includes all raw materials. Nevertheless, contracts have been placed by this firm to buy yarn, produce the finished article—

Sir Eric Fletcher: I do not want to interrupt the hon. Gentleman, but it is not clear how the difficulties of his constituent would be improved if these Amendments were accepted. It seems to me that he is, perhaps, concerned with the inclusion of further items in the Schedule.

Mr. Channon: The point that I am making is this. This firm entered into contracts which it is extremely difficult, if not impossible, to get out of. If it had the opportunity to get out of them, it would no doubt cancel them and it would not be hit by the surcharge. There is a case for further exemptions to which we will come later in the Bill. Even a few pennies difference in this trade makes all the difference between a profit or a loss. This is a small firm which faces bankruptcy as the result of the surcharge. I have approached the Board of Trade on its behalf, but, unfortunately, I have not managed to get any satisfaction.
My hon. Friend the Member for Bath (Sir E. Brown) only a few moments ago brought to my notice a case of a slightly different kind. A firm in his constituency bought a certain type of crane from America. It was exempted from import duty. The Board of Trade recognised that, owing to the special circumstances of the case, it should be entitled to a licence to import it duty free. When the surcharge was imposed on 27th

October the crane was in transit. It was due to arrive—in fact it may have arrived—in the third week in November. This firm is unable to cancel the order and, at the same time is faced with what is to it the insurmountable problem of possibly having to pay duty of about £10,000. No doubt it is extremely difficult to devise a method to get over this, but I cannot believe that it is impossible.
These Amendments are being pressed because there is a serious point behind them.

Mr. Stanley Orme: With no sincerity.

Mr. Channon: The hon. Gentleman may disbelieve me, but I assure him that there is a serious point behind these Amendments and many people are affected by them. If he thinks the contrary, perhaps he will get up and say so and then we can have it on record.

10.15 p.m.

Mr. Orme: The hon. Gentleman said that he was pressing these cases, and I said "With no sincerity", and I meant it.

Mr. Channon: As far as I know, I have never had the privilege of speaking to the hon. Member for Salford, West (Mr. Orme) before, but I am astonished that someone should make that accusation against another hon. Member who is doing his best to represent his constituents.

Mr. J. M. L. Prior: On a point of order, Dr. King. Is it in order for an hon. Member to accuse another of no sincerity or complete insincerity? Ought not the remark to be withdrawn?

The Chairman: It is not in order for hon. Members to make personal attacks upon one another or to impute false motives to one another. I hope that the hon. Member for Salford, West will withdraw his remark.

Mr. Orme: Dr. King, I withdraw any imputation which may be thought particularly to reflect on the Chair—

The Chairman: Order. No reflection is made upon the Chair. Any attacks in the Committee are made between hon. Members who differ politically. All such political attacks and the clash of ideas are quite within order. It is not in order for an hon. Member to impute


personal or false motives against another hon. Member, and I hope that the hon. Gentleman will withdraw what he said.

Mr. Orme: My remarks were not made in a personal sense, Dr. King. [HON. MEMBERS: "Withdraw."] If hon. Members will wait, I shall, perhaps, be allowed to make my point. [HON. MEMBERS: "Withdraw. That is all that is necessary."] The point I was making was to question not the individual sincerity of the hon. Member for Southend, West (Mr. Channon) but the sincerity of the argument.

Lieut.-Colonel Sir Walter Bromley-Davenport: On a point of order, Dr. King. The hon. Gentleman said no such thing. He made a definite charge against my hon. Friend of personal insincerity.

The Chairman: It would be more in keeping with the spirit of the House if the hon. Member for Salford, West made the statement he has just made and then withdrew his first remark. I ask him to withdraw the charge of insincerity which he made.

Mr. Orme: Very well, Dr. King. I withdraw the personal implications but stick to the broad premise.

Mr. Channon: I am grateful to the hon. Gentleman for that withdrawal, as far as it went. I can assure him—I hope that he will not find this insincere—that when he is addressing the Committee on a constituency matter he will not have to meet the same kind of treatment from this side.
I am sure that the Minister agrees that this is a serious point, even though he may disagree with the substance of it. I accept that there may be difficulties in exempting either goods in transit or goods the subject of a contract entered into, but considerable hardship is being caused to a number of small and medium firms. I refer to the purpose of the import surcharge as stated by the Financial Secretary of 24th November:
May I remind hon. Members, first, what the object of this charge is? It is to reduce imports, reduce them substantially and reduce them quickly".—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1215.]
Acceptance of this Amendment will make no difference to the level of imports.

These are goods which will come in anyway. I hope that the Government will reconsider the matter and give help to the many people who are genuinely affected and genuinely in deep trouble as a result of the present wording of the Clause.

Mr. Peter Emery: I realise that it is late, but three very important Amendments are being discussed at the same time as Amendment 19. I call attention first to Amendment No. 14, to delete subsection (8). By their action, the Government are altering contracts freely entered into by willing buyer and willing seller. If this is not so, I hope that we shall have the proper correction. There is a great deal of worry among industrial buyers about the subsection as a whole.
I reinforce what was said by my hon. Friend the Member for Southend, West (Mr. Channon). We are delighted to have the Minister without Portfolio to answer the debate, but industry is concerned about the industrial aspects of these questions and it will judge the Government very harshly for not having even one of six Ministers at the Board of Trade present. This is no reflection upon hon. Gentlemen now on the Front Bench, but it underlines the fact that the Government do not care about the way they deal with industry. This is a terrifying prospect to emerge from this most important debate.

Mr. Prior: Perhaps the reason why Ministers of the Board of Trade are not represented on the Government Front Bench is that they are so disgusted with this whole business that none of them dares to come to listen.

Mr. Emery: I did not want to go to those extremes, but my hon. Friend may well be right.
On subsection (8), as I understand the Amendment, we transfer automatically from the seller to the buyer, indeed, to the ultimate buyer, this particular surcharge. If that is so—and the right hon. Gentleman seems to be nodding—it means that where a buyer has brought in a contract exempting himself in a specific clause of that contract from any increase in the surcharge, that clause is null and void. It seems very strange and unusual for the Government to be encouraging a breach of a freely negotiated contract.
The right hon. Gentleman must realise that over the last three months, because


of the fear of a Labour Government coming into power, a considerable number of buyers attempted to ensure that their figures in their purchase prices were at all times absolute. I heard an hon. Member opposite say, "All the more reason for this Clause". He is suggesting that buyers in industry do not know their own business and that they should be lectured from the Government Front Bench. That is a strange statement., particularly if it comes from a Minister of the Treasury and not of the Board of Trade.
What industrial buyers have attempted to do over this period is to make the best bargains for their firms. They have bought only when they were absolutely certain that the prices at which they would be purchasing would not be reflected to their own customers. What the Government are saying is that it does not matter how good the contract was, nor how well buyers attempted to reinforce their position, a contract by this action of the Government will be rendered null and void. That needs a lot of explanation by the Government.
I turn to the position about delivery. I cannot for the life of me see what possible advantage the Government can have in not allowing this Amendment to be passed. Perhaps the wording is not adequate and perhaps they would like to change it, but what possible advantage can they obtain in demanding a surcharge on goods which have been bought and are already on the way of delivery? There are many ways of wording this Amendment, but we on this side of the Committee urge that this is the most simple of all. Where goods can be proved to be on the way of delivery, where there is a delivery note and they are in transit, the surcharge should not be made to the buyer.
The Financial Secretary said that it was imperative to make this bite, but it cannot do anything useful by encouraging the cancellation of orders of goods already on the way and being delivered. There is not any common sense in this, nor any business sense. Cannot the Government reconsider this aspect to see whether they can meet the genuine objections of industry in regard to the delivery of goods? I am told—I should like to be corrected if I am wrong—that even before the Bill becomes an Act the Customs and

Excise are demanding surcharges before they will release goods from the docks. Is this so? If it is, there is a very strange position. It seems that they are taking firms' money on deposit—I am told that it is put into a separate account, but it has to be paid—and presumably the interest is obtained before the goods are released and before the Bill becomes an Act of Parliament.
I turn to the aspect which perhaps is the most important, that of contracts. We have heard much said about small businesses and that is of particular importance. This aspect of contracts entered into affects not only small businesses, but also very large firms. I shall quote two examples dealing with tens upon tens of thousands of pounds affected by this surcharge. In November, 1963, a firm decided to construct at its factory a plant for the manufacture of a certain type of product. A substantial portion of its product will be exported. When the decision had been made a programme for constructing and equipping the plant was laid down. According to plans, the plant was to be operational in 1966.
The total cost of the plant and equipment is about £3 million, of which approximately £600,000 is for specialised equipment obtainable only in America. The specialised equipment was ordered in February, 1964, the delivery phased to coincide with the building operations. Approximately £100,000 worth of the equipment has already been delivered, leaving a balance of £500,000 worth to come. Building for this equipment has begun. This machinery is absolutely essential for the continuation and expansion of the firm's export business. The Committee will readily understand that the project is getting into very large sums of money. This firm is considering what is the meaning of the words used by the President of the Board of Trade. What is "a temporary impost"?

Hon. Members: Where is he?

10.30 p.m.

Sir Harmar Nicholls: On a point of order. References in speeches are entirely Board of Trade references. Would you be prepared, Sir Samuel, to accept a Motion that you do report Progress and ask leave to sit again? There are five Ministers at the Board of Trade.


These are arguments which ought to be heard and answered by a Board of Trade Minister.

The Deputy-Chairman: That is not a point of order and I am not prepared to receive such a Motion.

Mr. Emery: We well understand that you cannot accept a Motion, Sir Samuel, but the debate is on matters more and more affecting the Board of Trade. An hour ago it was suggested that one of the Members on the Government Front Bench should send for a Board of Trade Minister to listen to the debate. If this state of affairs had occurred in the last Parliament what an uproar there would have been.

Mr. Channon: Has my hon. Friend observed that the Leader of the House has arrived? Could he ask, through the Leader of the House, for the presence of a Board of Trade Minister?

Mr. Emery: I see the Leader of the House at the end of the Front Bench. Good evening. Before I am called to order, may I acquaint him with the fact that there is considerable disquiet arising from the situation that we are dealing with legal aspects of contract and delivery, all arguments having to do with trade, and that although there are six Ministers at the Board of Trade, not one has been sufficiently courteous to the Committee to attend and listen to the arguments. I hasten to add that we are delighted to see the two legal representatives of the Government, but it must be wrong for there to be no Minister from the Board of Trade present when the whole debate is on trade.
May I continue with the example which I was giving? The equipment costs £500,000. The firm is trying to decide what is meant by the temporary basis of the surcharge mentioned by the President of the Board of Trade. If it is to be temporary, the firm is willing to try to postpone the contract in order that it has not to pay 15 per cent. on £500,000. The benefit of the improvement in plant will go largely to exports. Surely the Government only lose by demanding 15 per cent. on a contract which has already been negotiated. It is of the greatest importance to the efficiency of the firm that it should be able to go forward with this equipment knowing that the Govern-

ment are not "taking the firm for a ride".
Another example, again involving a considerable sum of money, is of a company building a plant at Dundonald, in Ayrshire. I am pleased to speak for Scotland when there are so few Scots present on the Government benches. This company is in a development area, the contract was made many months ago and the plant costs £260,000. My informant says that firms are offered inducements in the form of capital grants to assist employment in development areas but that the new levy can seriously detract from such advantages and in future would have to be taken into account when carrying out any economic evaluation of further operations in the United Kingdom.
The firm is saying that it is being encouraged to go into a development area yet it finds immediately that part of the risk which it is taking and its capital investment are being "upped" by an extra 15 per cent. These are on past contracts, and it is on the aspect of contracts entered into that I wish strongly to urge the Minister without Portfolio to reconsider the whole of the Government's position. Will the hon. Gentleman realise that if the contractor attempted to safeguard himself, subsection (8) would not allow him to do so and that is that?

Mr. Holman: In going to the special area the person concerned still has the same net advantage because the 15 per cent, impost is universal.

Mr. Emery: I am delighted to take that point, because it is so easily answered. The point is that these people did not necessarily want to go into the area. They were induced to go, and in going they are taking a number of risks which they did not want to take. They are attempting to deal with specific economic problems. They should not be induced with one hand and then slapped down with the other. This must have an effect on anybody else who is considering that type of action.
What have I said? [Laughter.] I specifically said that, because it had seemed to me once before that hon. and right hon. Members opposite think that this is a laughing matter. They do not think that a serious argument is being put forward. It is in that spirit


that they have dealt with the Amendments throughout. This is why no representative of the Board of Trade is present. The Financial Secretary to the Treasury appears to shake his head, but industry will have to decide, not the hon. and learned Gentleman. This proposal in the Bill considerably increases capital costs on contracts entered into which have been finally costed and

which may now bear a considerable loss. If they bear a loss, the Government must realise that the larger firms will probably stop these extensions. Do the Government wish to stop the further development of large-scale industry? If they do not, they must somehow make an allowance on the lines of these Amendments.

Sir Eric Fletcher: I should like to begin by offering most cordial congratulations to the right hon. Member for Taunton (Mr. du Cann) on the honour bestowed upon him as indicated in the late Prime Minister's Dissolution Honours List today.
A number of arguments have been addressed to the Committee in support of the five Amendments which we are discussing. I will do my best to deal with as many of them as possible. Perhaps I should indicate, however, that some of the speeches made do not seem to have been directed to these Amendments at all.
I must remind hon. Members that the Committee has just adopted Clause 3 without a Division. In other words, we start from the premise that the Committee has agreed to the principle of the temporary surcharge of 15 per cent. on imports. These Amendments are directed to making exemptions in two specific classes of goods—goods in transit and goods which have been the subject of a contract already made. I shall seek to show that it would be contrary to the object of Clause 3 and to the Government's objectives in this surcharge operation if either of those suggestions were accepted.
I appreciate, as we all do, that a certain amount of hardship is imposed on a number of people when an additional Customs duty is imposed. Obviously, no taxation can be imposed without somebody suffering as a consequence, but the Committee has recognised that our balance of payments position is such that steps have had to be taken to reduce the deficit. We have heard criticisms from various hon. Members, and hon. Members on either side of the Committee are naturally impressed by complaints which they have received from their constituents. We have heard of a number of hard cases.

Sir Harmar Nicholls: I understand the hon. Gentleman to be arguing that, because we have passed Clause 3 without a Division, we have therefore completely accepted the principle that the surcharge should be applied. However, we accepted that Clause without a Division in the knowledge that the Government themselves had already put down Amendments to exempt certain categories. would not the hon. Gentleman agree that

the Government have breached the principle themselves and that we are therefore entitled to push for further exemptions if the arguments for them are justified?

Sir E. Fletcher: The hon. Gentleman is mistaken. When we discuss the Schedules, we shall be able to discuss whether certain goods are properly included in the surcharge, but at the moment we are arguing whether it is possible or practicable, even wise and just, to exclude from the operation of the surcharge all goods in transit and all goods subject to a contract. I shall seek to show that it would be quite impossible to do that.
I shall first deal with goods in transit, the subject of an Opposition Amendment and a Liberal Amendment. One of the difficulties about exempting goods in transit is that it is quite impossible to define "goods in transit". I will seek to explain why. One can determine the point at which goods arrive in this country and thereby when they are entered for Customs and become liable for duty, but it is impossible to decide what goods were ever destined to come to this country.
Hon. Members who are familiar with commercial operations will know perfectly well that many shipments of goods from foreign countries take place in circumstances in which the port of destination is not known at the time of shipment. The port of destination is very often changed during the course of the voyage, often by telegraphic or telephonic instructions to the captain of the ship. It would open the door to considerable evasion if goods intended for some other country were diverted to this country and thereby enabled to escape liability for surcharge. There is a major difficulty about giving exemption to goods in transit, partly because of the difficulty of deciding which goods in transit were originally intended to come to our shores.
10.45 p.m.
The second difficulty, of course, is that it would produce a whole range of anomalies, because goods in transit may come from some other European country or may come from the Far East, in which case there would be a long period of transit, and it would in effect be giving an unfair discrimination against goods


from Europe, if there were relief given to goods shipped perhaps a month or two or even more before from other ports. It would really produce intolerable difficulties.
The right hon. Gentleman said that as this is a temporary surcharge intended to be of only short duration the administrative difficulties could be ignored, but as a matter of fact the argument is exactly the opposite to what the right hon. Gentleman put forward. The administrative difficulties of dealing with goods in transit are precisely the same whatever the duration of the charge, and it is exactly because this is a charge intended to be of temporary duration that it is not worth while going to the cost and expense and difficulty of erecting all the administrative machinery which would be required to disentangle legitimate goods in transit from cases of evasion.

Mr. Bessell: rose—

Sir E. Fletcher: Let me finish this part of my argument. I am dealing now with goods in transit. Then I will give way. All right, I will give way now.

Mr. Bessell: I am grateful to the hon. Gentleman. The whole point of my Amendment, and that of my hon. and learned Friend the Member for Montgomery (Mr. Hooson), Amendment No. 13, is that it specifically applies exemption to goods for which bills of lading specifying a British port of entry have been already dispatched, that is to say, dispatched prior to 27th October. The arguments which the hon. Gentleman is advancing, I would suggest, are covered by that Amendment.

Sir E. Fletcher: I had not overlooked the hon. Gentleman's Amendment. I was coming to deal with it in a moment. I was going to say that, as so often happens in these cases, I found the Liberal Amendment on this subject of goods in transit more intelligent and more sensible than the Amendment of the right hon. Gentleman. [HON. MEMBERS: "Oh."] T was just coming on to say that I am perfectly prepared to give credit to the hon. Members on the Liberal bench, that their Amendment goes some way to overcome the objection to the Conservative Amendment, which I call the difficulty of controlling legitimate as distinct from evasive goods in transit. The Liberal Amendment is more specific. It

would enable one to rule out the ambiguous cases in which one did not know to what country the goods were originally consigned.
It is general Customs practice, and always has been, in this country, and, as far as I know, in all other countries, that Customs duties operate on goods in transit, that is the universal practice in our country and all countries down to date. There has been an attempt in recent years in Canada and Australia, to exclude from charge goods in transit if so defined in the kind of way the Liberal Amendment suggests, and we have examined that. But I must tell the hon. Member quite candidly that we have come to the conclusion that, although it might be possible to make that kind of exclusion in the case of Canada and Australia, where the countries from which goods are imported are far more limited, it would really not be practicable in our case, and moreover it would act against the basic principle of Government policy, which is that this surcharge should operate immediately, that it should have a quick immediate effect on all goods as from a precise, definite date. If one were to exclude goods in transit from liability to a temporary charge of this kind, there would be the further difficulty that when the surcharge was removed it would be only equitable to retain the charge in respect of goods which were then in transit.

Mr. Heath: When the hon. Gentleman says that the Government's objective is to make this surcharge effective, he presumably means keeping imports out. Goods in transit, or on order, will not be kept out by this provision. They are bound to come in in the same way. All that they do is bear the surcharge, which is a burden on industry and on the whole working of the economy. The method suggested by the Liberal Amendment is one practical way of identifying them, but would not the hon. Gentleman also agree that now, one month after the date of the imposition of this surcharge, there can be very few cargoes in the world which can be diverted? They are all here now.
It is only a question of looking at the bills of lading and seeing that the date was 27th October, or earlier, to distinguish them. This does not require great administrative machinery, or anything


like that. It can be done easily at the ports.

Sir E. Fletcher: The right hon. Gentleman made three points. He said, quite rightly, that if the surcharge bites on goods in transit it does not keep those goods out. Quite obviously it does not, but it may indirectly limit the quantum of other goods which are coming in subsequently. I should have thought that that was obvious.
The whole intention of the surcharge is to limit the totality of goods which come in. If one makes an exemption in respect of these specific goods, one gives an unfair advantage to others. I hope that the right hon. Gentleman will bear in mind that during this debate three hon. Members on the benches opposite have pointed out that many importers have been forestalling the operation of this surcharge, because they anticipated it, and have been trying to send goods—some of which are now in transit—to this country before the introduction of the surcharge. It would be morally wrong to give those importers a benefit over those who have not made imports into this country.

Mr. Peter Emery: The hon. Gentleman said that he saw great difficulties in being able to define this. He said that on the whole he could not see an administrative way of getting round it. Would he be willing to have discussions with the professional bodies dealing with this matter? They believe that they can quite definitely and objectively define this. Before he forces this matter through, would he be willing to do what the Board of Trade has not so far done, namely, have discussions with the professional bodies affected to see whether they can advise him on the method of applying this?

Sir E. Fletcher: I am not prepared to give that undertaking because, as I pointed out, these administrative difficulties are only one of the various objections to the acceptance of the Amendment. The Board of Trade and the Customs have been into this matter very thoroughly already.
I pass briefly to the other Amendment which we are discussing, namely, the one dealing with contracts which have been entered into. Here I must refer to the speech of the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), be-

cause there seems to have been a good deal of confusion about the operation of the Act of 1901.
In this connection I would refer to the valuable observations, as I thought them, of my hon. Friend the Member for Bethnal Green (Mr. Holman). He pointed out that there may be contracts of three different kinds. There may be a contract in which it is provided that all Customs duties are for the buyer's account. In that case no problem arises. There may be contracts in which that is not provided. In answer to the hon. Member for Walsall, South, as I told him at the time, the Act of 1901—which has been in operation now for 63 years—provides that whenever there is a new imposition of Customs duty the seller, in the absence of an agreement to the contrary, is able to add that additional Customs duty in his price to the buyer, and the whole intention of subsection (8) is to go on to provide that even if there is an agreement to the contrary that shall not operate, and the seller can still pass on that liability to the buyer.
The hon. Member for Reading (Mr. Peter Emery) took exception to that. He took an exactly contrary view to that of his hon. Friend the Member for Walsall, South. What the Government have done in this respect is to have regard—as I am sure the right hon. Member for Bexley (Mr. Heath) would wish them to do—to the wishes of some E.F.T.A. and Commonwealth exporters. Subsection (8), which the right hon. Member for Taunton wishes to remove, is introduced for the specific purpose of protecting those E.F.T.A. and Commonwealth exporters who otherwise might have had a legitimate grievance in this respect.

Mr. William Baxter: I am most interested in that part of my hon. Friend's speech dealing with passing on to the consumer any increase in costs caused by an alteration in the import duty, irrespective of the contents of the contract. If, perchance, a retailer passed that on to another contracting company which was under a set-price contract, say, with a local authority, could it then get a nullification of its contract, if it were on a fixed-price basis?

Sir E. Fletcher: In the ordinary case, if there is an existing contract the Act of 1901 enables a seller in this country


to pass on the surcharge to a buyer in this country.
I want to conclude by dealing with the cases raised by a number of hon. Members about the difficulties which they say arise where specific pieces of machinery have already been imported, or have been agreed to be imported, under contract. Everyone recognises that there may be difficulties for various importers where they have committed themselves to buying machinery, but it is relevant to remind the Committee that it is largely because there has been such an excessive importation of machinery in recent months that these steps are necessary, in order to correct our balance of payments. I would add that importers of machinery, as distinct from importers of raw material, will get the benefit of the initial allowances and the investment allowances, as a result of which they will not suffer to anything like the extent of the 15 per cent. surcharge. The figure in their case will be substantially reduced.
For all these reasons I must advise the Committee, consistent with the provisions of the Bill, that the Amendments should be resisted.

11.0 p.m.

Mr. Prior: I want to take up the time of the Committee for only one minute. The hon. Gentleman could have given me a chance to make my few comments before he got up, as I have listened to the whole of this debate so far. I want to make a constituency point. This point backs up the speech of my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), because I have details of a case where a contract was entered into on 5th October with a firm in Norway to buy 2,000 tons of fertiliser. This was at a fixed price, duty free at an East Coast port.
According to Clause 3(8), the extra 15 per cent. surcharge can now be passed on in the original price—it was £23 10s. a ton and it now becomes £26 a ton or thereabouts. But this supposes that this company which has imported this fertiliser can pass it on in turn to its customers.

Sir Eric Fletcher: If there has been a contract pre-existing he can, under the 1901 Act.

Mr. Prior: In agriculture, it is quite usual for no contract as such to be entered into. So this firm has now agreed to import 2,000 tons, it has to pay the extra duty, and it stands no chance at all of being able to pass this duty on to the farming community, because they can obtain at least part of the fertiliser they want at a lower price from the British market.
The object of the surcharge is to keep down imports and increase home production thereby. At the moment, we are producing, flat out, all the nitrogenous fertiliser we can, and therefore all we are doing by putting on this surcharge is either to cause this firm the grave embarrassment of having to pay the extra duty and hold supplies it cannot sell or we are denying to the farming community the chance to buy this fertiliser and improve their production. That is the sort of case which could be dealt with under one of these Amendments.
If we are to have no remission in the case of contracts entered into before 26th October, then this firm will be placed in very serious trouble. Ruin, as my right hon. Friend said in opening this debate, is not too strong a word in a case like this. The Government have not had any speeches from their own back benches, and hon. Members opposite have made no constituency points. That is very strange. I cannot believe that we are the only people with constituency points. There must be many hon. Members opposite who have them. This is a serious matter, and I hope that the Government will look at this again to see whether they cannot make provision, which is covered by one of our Amendments, to put this matter right.

Mr. G. B. Drayson: I am very sorry that the Minister without Portfolio has not been able to distinguish in these Amendments the difference between materials in transit and orders for machinery to increase the efficiency of firms which have ordered machinery from overseas because they have not been able to get comparable machines in this country. If there were anybody on the Government Front Bench from the Board of Trade, they would know that I have been in correspondence with that Department on the subject of machinery ordered by a firm in my own constituency which wishes, naturally, to


increase its efficiency and production and to increase its exports as well.
These machines are subject to a contract which has been entered into over many months, after very careful investigation as to whether the appropriate machines were available in this country. I wish that the Minister would look at this whole matter again, because what the Government are doing is taxing efficiency. We do not claim that we have machines manufactured in this country which will do every job, and, therefore, we are relying considerably on the export of our machine tools overseas, and there is a give and take in the machine tool industry. Some firms overseas may have machines which we need, while we have machines which companies overseas wish to import from us. Where a contract is in existence—and the Minister specifically referred to contracts in existence—it should not be impossible to differentiate and make an exception so that where a machine has been ordered and the necessary financial arrangements entered into, a remission of duty should take place.

Mr. du Cann: I should like, first, to thank the Minister without Portfolio and the whole Committee for the kind things they have said about me this evening.
There is overwhelming evidence, from the admirable speeches made by my hon. Friends—including my hon. Friend the Member for Yarmouth (Mr. Fell), my hon. Friend the Member for Reading (Mr. Peter Emery), my hon. Friend the Member for Lowestoft (Mr. Prior) and my hon. Friend the Member for Skipton (Mr. Drayson)—that the situation which the Government have themselves created is thoroughly unfair in respect of these two categories. There is further overwhelming evidence to show that there will be no saving in imports because the Government are, apparently, unwilling to accept our reasonable Amendment. There will be no saving in foreign currency, an unnecessary increase in

costs and a sense of injustice throughout industry.

The whole of industry will be bitterly disappointed by the Minister's speech. We entirely appreciate that there might be difficulties over the drafting of the Amendment, but I pointed out at the outset that we were not particularly wedded to the wording. We are concerned only that this injustice be removed. Hard cases make bad law. I was weaned on that phrase and I dare-say the Minister was, too. I beg him to remember it.

We appreciate that it may not be possible for the Chancellor of the Exchequer to be present tonight. That may create certain difficulties for the Committee as a whole, but the absence of a Board of Trade representative, certainly for most of this discussion, cannot be so easily excused. I hope, therefore, that the Minister without Portfolio will bring what has been said in this debate to the notice of the Chancellor, and perhaps the Government may decide to table an Amendment to deal with the position on Report because, with the greatest respect for the Minister, I positively refuse to believe that the matter cannot be dealt with.

To hear the Minister say that it was not practical to deal with the matter surprised me. Frankly, I was shocked to hear the word "impossible" come from the lips of a Minister of Her Majesty's Government on a question relating to righting an injustice. [Interruption.] Hon. Members opposite below the Gangway should realise that there is an injustice. As we have pointed out, some manufacturers, agents and others are facing ruin. It is right that we should take this matter seriously and I must advise my hon. Friends to vote in favour of the Amendment.

Question put, That the proposed words be there inserted:—

The Committee divided: Ayes 160, Noes 187.

Division No. 20.]
AYES
[11.9 p.m.


Agnew, Commander Sir Peter
Bennett, F. M. (Torquay)
Blaker, Peter


Alison, Michael (Barkston Ash)
Berkeley, Humphry
Bowen, Roderic (Cardigan)


Astor, John
Berry, Hn. Anthony
Box, Donald


Atkins, Humphrey
Bessell, Peter
Boyd-Carpenter, Rt. Hn. J.


Awdry, Daniel
Biffen, John
Braine, Bernard


Baker, W. H. K.
Biggs-Davison, John
Brewis, John


Barlow, Sir John
Bingham, R. M.
Brinton, Sir Tatton


Batsford, Brian
Black, Sir Cyril
Bromley-Davenport,Lt.-Col.Sir Walter




Brooke, Rt. Hn. Henry
Heath, Rt. Hn. Edward
Morrison, Charles (Devizes)


Brown, Sir Edward (Bath)
Hendry, Forbes
Murton, Oscar


Buchanan-Smith, Alick
Higgins, Terence L.
Nicholls, Sir Harmar


Buck, Antony
Hill, J. E. B. (S. Norfolk)
Noble, Rt. Hn. Michael


Butcher, Sir Herbert
Hirst, Geoffrey
Nugent, Rt. Hn. Sir Richard


Carlisle, Mark
Hornby, Richard
Onslow, Cranley


Carr, Rt. Hn. Robert
Hornsby-Smith, Rt. Hn. Dame P.
Osborn, John (Hallam)


Channon, H. P. G.
Howard, Hn. G. R. (St. Ives)
Osborne, Sir Cyril (Louth)


Chataway, Christopher
Howe, Geoffrey (Bebington)
Page, John (Harrow, W.)


Chichester-Clark, R.
Hunt, John (Bromley)
Page, R. Graham (Crosby)


Clark, William (Nottingham, S.)
Irvine, Bryant Godman (Rye)
Pickthorn, Sir Kenneth


Cooke, Robert
Jenkin, Patrick (Woodford)
Pitt, Dame Edith


Cooper-Key, Sir Neill
Johnston, Russell (Inverness)
Pounder, Rafton


Crawley, Aldan
Jones, Arthur (Northants, S.)
Powell, Rt. Hn. J. Enoch


Cunningham, Sir Knox
Jopling, Michael
Prior, J. M. L.


Curran, Charles
Kaberry, Sir Donald
Pym, Francis


Currie, G. B. H.
Kershaw, Anthony
Rawlinson, Rt. Hn. Sir Peter


Davies, Dr. Wyndham (Perry Barr)
Kilfedder, James A.
Redmayne, Rt. Hn. Martin


d'Avigdor-Goldsmid, Sir Henry
Kimball, Marcus
Rees-Davies, W. R.


Dean, Paul
King, Evelyn (Dorset, S.)
Roberts, Sir Peter (Heeley)


Deedes, Rt. Hn. W. F.
Kitson, Timothy
Roots, William


Douglas-Home, Rt. Hn. Sir Alec
Lambton, Viscount
Russell, Sir Ronald


Drayson, G. B.
Lancaster, Col. C. G.
Scott-Hopkins, James


du Cann, Edward
Legge-Bourke, Sir Harry
Sharples, Richard


Eden, Sir John
Litchfield, Capt. John
Spearman, Sir Alexander


Emery, Peter
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)
Stainton, Keith


Fell, Anthony
Lloyd, Ian (P'tsm'th, Langstone)
Stanley, Hn. Richard


Fletcher-Cooke, Charles (Darwen)
Lloyd Rt. Hn. Selwyn (Wirral)
Summers, Sir Spencer


Forrest, George
Longbottom, Charles
Taylor, Edward M. (G'gow, Cathcart)


Foster, Sir John
Loveys, Walter H.
Thompson Sir Richard (Croydon,S.)


Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)
Lubbock, Eric
Tilney, John (Wavertree)


Fraser, Ian (Plymouth, Sutton)
Lucas-Tooth, Sir Hugh
Turton, Rt. Hn. R. H.


Gammans, Lady
Mackenzie, Alasdair (Ross&amp;Crom'ty)
van Straubenzee, W. R.


Giles Rear-Admiral Morgan
Mackie, George Y. (C'ness &amp; S'land)
Walters, Dennis


Gilmour, Sir John (East Fife)
McNair-Wilson, Patrick
Ward, Dame Irene


Goodhew Victor
Maginnis, John E.
Weatherill, Bernard


Grant, Anthony
Marten, Neil
Whitelaw, William


Griffiths, Peter (Smethwick)
Mathew, Robert
Wilson, Geoffrey (Truro)


Grimond, Rt. Hn. J.
Mawby, Ray
Wolrige-Gordon, Patrick


Hall, John (Wycombe)
Maydon, Lt.-Cmdr. S. L. C.
Wood, Rt. Hn. Richard


Hall-Davis, A. G. F.
Meyer, Sir Anthony
Woodnutt, Mark


Hamilton, Marquess of (Fermanagh)
Mills, Peter (Torrington)
Wylie, N. R.


Harrison, Col. Sir Harwood (Eye)
Miscampbell, Norman
Younger, Hn. George


Hawkins, Paul
Mitchell, David



Hay, John
Monro, Hector
TELLERS FOR THE AYES:


Heald, Rt. Hn. Sir Lionel
Morgan, W. G.
Mr. McLaren and Mr. More.




NOES


Abse, Leo
Delargy, Hugh
Hamling, William (Woolwich, W.)


Albu, Austen
Dell, Edmund
Harper, Joseph


Alldritt, W. H.
Dempsey, James
Harrison, Walter (Wakefield)


Armstrong, Ernest
Diamond, John
Hayman, F. H.


Atkinson, Norman
Dodds, Norman
Hazell, Bert


Bagier, Gordon A. T.
Doig, Peter
Heffer, Eric S.


Barnett, Joel
Driberg, Tom
Holman, Percy


Baxter, William
Duffy, Dr. A. E. P.
Hordern, Peter


Beaney, Alan
Dunn, James A.
Houghton, Rt. Hn. Douglas


Benn, Rt. Hn. Anthony Wedgwood
Dunnett, Jack
Howarth, Harry (Wellingborough)


Bennett, J. (Glasgow, Bridgeton)
Edwards, Rt. Hn. Ness (Caerphilly)
Howarth, Robert L. (Bolton, E.)


Bishop, E. S.
Edwards, Robert (Bilston)
Hoy, James


Blackburn, F.
English, Michael
Hughes, Emrys (S. Ayrshire)


Blenkinsop, Arthur
Ennals, David
Hunter, Adam (Dunfermline)


Boardman H.
Ensor, David
Hunter, A. E. (Feltham)


Bowden, Rt. Hn. H. W. (Leics S. W.)
Fernyhough, E.
Irving, Sydney (Dartford)


Boyden, James
Finch, Harold (Bedwellty)
Jackson, Colin


Braddock, Mrs. E. M.
Fitch, Alan (Wigan)
Janner, Sir Barnett


Bradley, Tom
Fletcher, Sir Eric (Islington, E.)
Jeger,Mrs.Lena(H'b'n&amp;St.P'cras,S.)


Bray, Dr. Jeremy
Fletcher, Ted (Darlington)
Jones, Dan (Burnley)


Brown, Hugh D. (Glasgow, Provan)
Fletcher, Raymond (Ilkeston)
Jones,Rt.Hn.SirElwyn(W.Ham,S.)


Brown, R. W. (Shoreditch &amp; Fbury)
Foley, Maurice
Jones, J. Idwal (Wrexham)


Buchan, Norman (Renfrewshire, W.)
Foot, Michael (Ebbw Vale)
Jones, T. W. (Merioneth)


Buchanan, Richard
Fraser, Rt. Hn. Tom (Hamilton)
Kelley, Richard


Carmichael, Neil
Freeson, Reginald
Kenyon, Clifford


Carter-Jones, Lewis
Galpern, Sir Myer
Kerr, Mrs. Anne (R'ter &amp; Chatham)


Coleman, Donald
Garrow, A.
Lawson, George


Crawshaw, Richard
Ginsburg, David
Leadbitter, Ted


Cullen, Mrs. Alice
Gourlay, Harry
Ledger, Ron


Dalyell, Tam
Gregory, Arnold
Lever, L. M. (Ardwick)


Davies, G. Elfed (Rhondda, E.)
Griffiths, David (Rother Valley)
Lewis, Ron (Carlisle)


Davies, Harold (Leek)
Hale, Leslie
Lomas, Kenneth


Davies, Ifor (Gower)
Hamilton, James (Bothwell)
Loughlin, Charles


Davies, S. O. (Merthyr)
Hamilton, William (West Fife)
Mabon, Dr. J. Dickson







McBride, Neil
Palmer, Arthur
Swain, Thomas


MacDermot, Niall
Pargiter, G. A.
Swingler, Stephen


McGuire, Michael
Pavitt, Laurence
Symonds, J. B.


McInnes, James
Pentland, Norman
Thomas, George (Cardiff, W.)


McKay, Mrs. Margaret
Probert, Arthur
Thomas, Iorwerth (Rhondda, W.)


MacKenzie, Gregor (Rutherglen)
Redhead, Edward
Thomson, George (Dundee, E.)


MacMillan, Malcolm
Rhodes, Geoffrey
Tinn, James


MacPherson, Malcolm
Richard, Ivor
Tuck, Raphael


Mahon, Peter (Preston, S.)
Roberts, Albert (Normanton)
Urwin, T. W.


Mahon, Simon (Bootle)
Roberts, Goronwy (Caernarvon)
Varley, Eric G.


Mallalieu,J.P.W.(Huddersfield,E.)
Robertson, John (Paisley)
Wainwright, Edwin


Manuel, Archie
Rose, Paul B.
Walden, Brian (All Saints)


Mapp, Charles
Ross, Rt. Hn. William
Walker, Harold (Doncaster)


Mikardo, Ian
Rowland, Christopher
Wallace, George


Millan, Bruce
Sheldon, Robert
Warbey, William


Miller, Dr. M. S.
Shore, Peter (Stepney)
Watkins, Tudor


Milne, Edward (Blyth)
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)
White, Mrs. Eirene


Molloy, William
Short, Mrs. Renée (W'hampton,N.E.)
Whitlock, William


Morris, Charles (Openshaw)
Silkin, John (Deptford)
Wilkins, W. A.


Murray, Albert
Silkin, S. C. (Camberwell, Dulwich)
Williams, Alan (Swansea, W.)


Neal, Harold
Silverman, Julius (Aston)
Williams, Mrs. Shirley (Hitchin)


Newens, Stan
Silverman, Sydney (Nelson)
Williams, W. T. (Warrington)


Noel-Baker, Francis (Swindon)
Slater, Mrs. Harriet (Stoke, N.)
Willis, George (Edinburgh, E.)


Norwood, Christopher
Slater, Joseph (Sedgefield)
Wilson, William (Coventry, S.)


Oakes, Gordon
Small, William
Winterbottom, R. E.


Ogden, Eric
Snow, Julian
Woodburn, Rt. Hn. A.


O'Malley, Brian
Solomons, Henry
Woof, Robert


Orme, Stanley
Spriggs, Leslie



Page, Derek (King's Lynn)
Summerskill, Dr. Shirley
TELLERS FOR THE NOES:




Mr. McCann and Mr. Grey.

Mr. Geoffrey Lloyd: I beg to move Amendment No. 23, in page 5, line 6, at the end to insert:
(4) Duty under section 3 of this Act shall not be charged on goods which, on 26th October 1964, were exempted from duty by Treasury Direction under section 6 of the Import Duties Act 1958 or on goods which may be so exempted at a subsequent date.

The Deputy-Chairman: I suggest that it would be convenient to discuss with this Amendment Amendment No. 113, in page 5. line 6, at the end to insert:
(4) Duty under section 3 of this Act shall not be charged on goods which, on 26th October 1964, were exempted from duty under sections 3(6) and 13 of the Import Duties Act 1958.

Mr. Lloyd: Yes, Sir Samuel.
I shall develop the case for this Amendment briefly. The purpose is to exempt from the surcharge a very special class of imports. In the first place, they are not obtainable in this country, and, in the second place, they have to be exempted by the action of the Government themselves. Not only that, but the whole operation is very closely restricted by statute. The three classes of goods concerned are mentioned in the Fourth Schedule to the Import Duties Act, 1958, and they comprise only certain types of machinery, scientific instruments and organic chemicals.
It is not mandatory on the Treasury to exempt goods of this type from duty. The Treasury has to take action only if

it considers it desirable, and the onus of proof is firmly upon those who make application. Moreover, the application has to be made not in respect of classes of goods but in respect of specific importations. Thus, the Treasury is able to examine the argument in regard to specific importations coming within the classes covered by the Schedule.

It will be seen, therefore, that we are concerned with a very highly restricted type of imports which have received, so to speak, a certificate from the Treasury, on the advice no doubt of the Board of Trade, because they are highly desirable for this country and are, in fact, excused ordinary duty. I have already mentioned the formal position, and the Committee will understand how restricted it is, and how, furthermore, it is completely within the control of the Government. I should like to give one example of the type of goods dealt with in this way. They are highly specialised electronics items, some used by industry, and some in university laboratories.

These are goods which our own country is very good at producing—that may be said—but we do not produce every kind. Some of our products are better in this field than any in the world, but sometimes we have to import—there is no other expedient—and the Government are always the judge. We feel that the surcharge, as it has been explained today, is certainly not appropriate for this very


special class of import, over which the Government maintain full control. I ask that this Amendment, in the interests of a very special class of goods, should be favourably considered.

Mr. Humphrey Atkins: At this hour I will very briefly support this Amendment and draw the attention of the Committee to five particular items which have come to my notice. They were ordered from abroad and are due to arrive here within the next few months, and in every case the Government has examined the application for free admission and in every case has agreed that these items are so essential that they should be allowed in without any duty.
I want to point out to the Committee that this is something which has already happened. These items are on order and I suggest that, since these particular items of which I am speaking—and no doubt, many others like them—have already been identified by the Government and licences granted for their admission, there is no case at all for charging the extra 15 per cent. surcharge. If the Government persist, it will have no effect on the delivery, but will simply add to the cost of manufacture and production in this country for the people who buy the completed articles.
It has already been admitted by the Government in the action they have taken so far that these goods are so essential for us to have that they are being allowed into this country duty-free. I am not talking of minor pieces of machinery. What I have in mind are items all concerned with the printing trade and they amount to a value of about £½ million. Considerable sums are involved and the only possible effect of charging the 15 per cent. duty on these items will be to increase production costs. It surely cannot be the Government's idea to load British industry with unnecessary burdens.
The Government want to restrict imports, but since these items about which I am speaking are so readily identifiable, and since the Government admit that they are so essential, and they are bound to come here in any case, then I submit that my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) has a strong case for arguing that the surcharge should not

be applied to goods in this very narrow category.

Mr. MacDermot: The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and the hon. Member for Merton and Morden (Mr. Atkins) have urged this Amendment with brevity and persuasion. I shall try to emulate their brevity to make up for the length of my Second Reading speech.
As they have pointed out, there is under the Import Duties Act, in the Fourth Schedule, a list of classes of goods which may be exempted by Treasury direction from the protective duties. What is being urged is that we should apply a similar exemption to this duty for any goods which are covered by such a direction. I think we can go some way to meet the hon. Members, but not all the way, as I shall show. On the face of it, there is nothing illogical in refusing to apply to a temporary and non-protective duty a carefully selected list of exemptions from a permanent protective duty. That is what this list is.
The list includes aircraft and spare parts and equipment for them which are intended to be used in maintaining overseas services, machinery, certain optical and scientific instruments and apparatus, dyestuffs, articles for test and examination with a view to promoting or improving the manufacture in the United Kingdom of comparable articles intended to be used non-commercially in scientific research or for the promotion of learning, of art, or of sport. As hon. Members will see, it is a very varied list.
Representations have been made from many quarters, including the F.B.I., on the lines of these Amendments. We have considered them very carefully, but point out that the reliefs given under the Act do not cover all types of machinery and other equipment used in machinery, and are limited in their scope partly from considerations of what would be protective criteria laid down under the Act and partly from practical considerations and special arrangements agreed with the interested parties. As an example, the remission is not granted to machine tools. I think hon. Members will agree that a remission system which has only limited application and is automatically tied to protective and other criteria would be inappropriate for this new charge, which is temporary, which is intended purely for


balance of payments purposes, and which—as we have repeated, I fear ad nauseam—must be defensible as being non-discriminatory and non-protective in character.
To apply a non-availability test only to these goods which happen to be covered by the protective duty system would be indefensible. To try to apply them to the whole field of plant and machinery and that of semi-manufactured goods and processed materials would be unacceptable on policy and practical grounds, indeed it would undermine the whole basis of the charge.
However, we have looked very carefully at the list and we find that there are certain classes in that list which we think we can make the subject of exemption without offending against the general principles on which we have sought to draw the line for this charge. These will be the subject of Amendments which will be moved at a later stage. They cover the categories of goods, firstly parts of aircraft where they are to be parts of large aircraft of a kind already exempt with a maximum total weight exceeding 18,000 lb. This is a corollary of the removal of large aircraft as announced by my right hon. Friend the Chancellor of the Exchequer at an earlier stage.
Secondly, we find that articles imported for non-commercial purposes and intended to be used in scientific research or for purposes connected with the advancement of any branch of learning or art or promotion of sport are again of a type which we think we can legitimately exempt. To do so would accord with our obligation under the U.N.E.S.C.O. Agreement not to charge for goods which are for educational and research purposes and for non-commercial purposes.
This is as far as we can go without undermining the whole basis in principle of the distinction which we sought to draw.
I hope that for these reasons the right hon. Member will not feel it necessary to press the Amendments.

11.30 p.m.

Mr. du Cann: I wonder if I could just say this. I listened with some care and attention to what the Financial Secretary had to say, and I am sure we

are all grateful to him for going some part of the way to meet us.
What we shall plainly require to do, I think, is to examine his words in the cold light of dawn, on the one hand, and to examine his Amendments, on the other.
It occurred to me in listening to him that in fact the list of exemptions he was proposing to deal with would in truth be rather narrow. If that is the case, then I must tell him in advance that my right hon. and hon. Friends and I would be far from satisfied. As my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and my hon. Friend the Member for Merton and Morden (Mr. Atkins) made clear, and this surely is a good point, it must be logical and reasonable for us to suggest that categories of goods which fall for exemption under the Import Duties Act, 1958, should be exempted under this particular head of surcharge.
Whatever is the sense of one Act of Parliament saying "No duty" and another Act of Parliament saying You must pay duty"? This seems very plain to us.
I do not wish to pursue the matter now, but we shall have to look at the Amendments which the Financial Secretary is proposing to table. We are grateful for his sympathetic attitude to the matter, but we think that there is a very large number of categories of goods here which could justifiably be regarded as being proper exemptions under the Act, avid we must inevitably—and I hope the Financial Secretary will understand my putting it in this way—reserve our right if we are not satisfied with the Amendments he puts forward, to table further Amendments ourselves.

Mr. Geoffrey Lloyd: In view of the conciliatory attitude of the hon. and learned Gentleman, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Mr. Diamond: I beg to move, That the Chairman do report Progress and ask leave to sit again.
I do this in view of the very conciliatory spirit which is abroad, and the


remarks of the right hon. Member for Taunton (Mr. du Cann) that he would wish to examine certain things in the cold light of dawn, from which I take it that it was implicit in his remarks that a little sleep between now and dawn would not be harmful to his examination.

Mr. Heath: We have made very considerable progress today on this Bill. There have been some long and detailed discussions, but I think that progress might have been easier if it had been possible for one of the many Board of Trade Ministers to be present during our debates. I hope that tomorrow, when we come to the Schedule, the Leader of the House will be able to arrange that one of the five Board of Trade Ministers is here. After all, the Board of Trade is becoming a smaller and smaller Department, but it is having more and more Ministers. It would help if we had one of them here to assist us in the matters we are discussing.
The Financial Secretary seemed to be going some way to meeting us on the last point, but I am not sure that the Government have gone very far. They are going to put some Amendments on the Paper, and then we can consider them, but I hope that the Financial Secretary or the Board of Trade Ministers will be able to help us tomorrow when we come to the details of the Schedule.

Question put and agreed to.

Committee report Progress to sit again Tomorrow.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir SAMUEL STOREY in the Chair]

Orders of the Day — SEVERN BRIDGE

Motion made, and Question proposed,

1. That the Minister of Transport (hereinafter referred to as "the Minister") shall be authorised, in accordance with orders to be made by him, to levy tolls in respect of vehicles using the carriageways comprised in those parts of a new road constructed, or in the course of being constructed, by the Minister which cross the Rivers Severn and Wye by bridges or constitute the approaches to such bridges.

2. That it is expedient to provide—

(a) for imposing restrictions and other requirements in respect of vehicles stopping or remaining at rest on the said carriageways, and for securing the removal of such vehicles and the imposition of charges in respect of their removal;
(b) for securing the operation (either by the Minister or by other persons) of a service of removing such vehicles from the said carriageways;
(c) for extending, in relation to the said carriageways, the powers of prohibiting or restricting the use of roads, and, in particular, of regulating the use of special roads, conferred by the enactments relating to road traffic; and
(d) for imposing other prohibitions and restrictions in relation to the parts of the new road which are referred to in paragraph 1 of this Resolution and in relation to structures, works and apparatus on, under or over those parts of that road or connected therewith or with the regulation of traffic thereon or with the levying of tolls as mentioned in that paragraph.
3. That, in any case where by reason of any accident or other emergency vehicles which would otherwise use the said carriageways are authorised to use the cycle track or the footway comprised in those parts of the new road which are referred to in paragraph 1 of this Resolution, the Minister shall be authorised to levy tolls in respect of the use of the said cycle track or the said footway by those vehicles; and, for the purposes of any such case, paragraph 2 of this Resolution shall have effect in relation to the said cycle track or the said footway as it has effect in relation to the said carriageways.
4. That it is expedient to provide for the extinguishment of any franchise to operate a ferry across the River Severn in the vicinity of the said new road and for the payment by the Minister of compensation in respect of any such ferry which is discontinued in consequence of the provision of that road.
5. That tolls levied as mentioned in paragraphs 1 and 3 of this Resolution, and any sums received by the Minister in connection with the removal of vehicles as mentioned in paragraph 2 (or in that paragraph as extended by paragraph 3) of this Resolution, shall be paid into the Exchequer.
6. That it is expedient to provide for other matters incidental or supplementary to the matters specified in the preceding paragraphs of this Resolution.—[Mr. MacDerntot.]

11.37 p.m.

Mr. J. Enoch Powell: I feel that it would be wrong for the Committee, even at this hour of the night, to pass this Resolution, which will, after all, determine the ambit of the Bill which in due course will be founded upon it, without some outline indication of the policy to be followed in implementing the Resolution eventually


—in the form, presumably, of regulations which will fix the tolls.
This Resolution implements the policy in regard to the Severn Bridge which was announced some years ago by my right hon. Friend the Member for Wallasey (Mr. Marples), and I congratulate the Labour Party on bringing it forward, since for many of them it represents a change in point of view—for example, a change in point of view for the hon. Member for Fife, West (Mr. William Hamilton), who only a year ago said that the only people still in favour of tolls were the then Government and the Tory Members for Scotland, and a change in point of view for the Secretary of State for Commonwealth Relations, who a few years ago considered
the introduction of a toll system … a retrograde step."—[OFFICIAL REPORT, 2nd February, 1955; Vol. 536, c. 1102.]
However, we are all now toeing the same line, and I must assume that the Government accept that in the case of these large projects, which bring about a really substantial economy, and which for practical purposes can be isolated from the rest of the road and bridge system, there is a sound justification for the system of tolls. I think that it would, however, be reasonable if the Government gave some indication of the broad policy which is intended to be followed. I quite understand that initially the fixing of any toll must be empirical. One cannot tell in advance exactly what toll or system of tolls will produce a given financial result. Nevertheless, I think that it would be, helpful to the Committee and only right if the general policy were known.
Is it the intention that the tolls should recover the whole cost of the bridge or the whole cost together with the current maintenance of the bridge? If they are intended to recover the cost or part of the capital cost, over how many years is that to be calculated for this purpose?
Finally, is it intended that in due course they should accumulate a surplus, or will they be extinguished when the initial purpose has been accomplished? These are matters of general policy and it is only right that in bringing forward this Resolution which will make it possible to impose tolls, the Government should indicate broadly the financial relations they intend between the system of tolls and the

cost of the bridge. I hope that we shall have a brief explanation on these lines from the Government Bench.

Mr. Charles Loughlin: I must plead that I have a constituency interest in this matter. I should like to add to the plea made to the Government to give a clear indication of their intentions. It was to some extent impudent of the right hon. Member for Wolverhampton, South-West (Mr. Powell) to have indulged in the type of speech which he delivered. He is the last person who should talk about tolls, because he believes in them and has done so for a considerable time.
I do not believe in the toll system for bridges, and where the tolls are given to private enterprise, as in the many instances which my hon. Friend the Member for Fife, West (Mr. William Hamilton) has raised in the House, they are a crying scandal. They are not just tolls for bridges. They are tolls in spite of bridges in many instances.

Mr. Geoffrey Wilson: Not all.

Mr. Loughlin: I remind the hon. Member that I have just said that I was talking about the instances given by my hon. Friend the Member for Fife, West who has repeatedly complained not solely that there are tolls but that the bridges for which tolls have been paid have been poor substitutes for bridges.

Mr. Geoffrey Wilson: I said "not all" because among the bridges referred to by the hon. Member for Fife, West (Mr. William Hamilton) was the Whitney bridge, the private enterprise beneficiaries of which have received no benefit from it for some years because maintenance costs have been greater than the receipts.

Mr. Loughlin: It is a pity that an intervention in reply to an intervention is not permissible, because I should have liked my hon. Friend the Member for Fife, West to have intervened on that intervention. I do not know all the bridges—

The Deputy-Chairman: We are dealing only with the Severn Bridge at present.

Mr. Loughlin: That is perfectly true. I do not want to pursue the matter because it is not germane to my case, but


in fairness to the Committee, and because it will be going on the record, I respectfully submit that it is in order when talking about tolls which will be applied to the Servern Bridge to make one's comparisons, provided that one does not spend too great a time on the point one is making. The only toll bridge of which I have personal experience is that at Selby, to which my hon. Friend the Member for Fife, West has often referred. If there is anyone who will say that that is a bridge, his concept of a bridge is different from mine.
The Severn Bridge just touches my constituency and will undoubtedly provide a tremendous improvement in transport communications in the area. Why in this age we should be considering imposing on transport users charges which would be more in keeping with the 17th and 18th centuries, I do not know. As the right hon. Member for Wolverhampton, South-West has said, we are continuing the policies of the previous Government in this respect, but we have expressed ourselves in no uncertain terms about those outdated and outmoded policies.
Some of the tolls on motor vehicles, especially those engaged in trade, will be an onerous burden in certain respects. If transport costs for the people of the Forest of Dean are increased, that will be unfortunate for an area facing difficult employment problems. Transport costs may be cheapened, but it is incumbent on the Government now to state clearly what is in their minds.
My area is faced not only with the closure of two pits with 720 redundancies, but with the closing down of an A.F.I. factory with 850 employees. The A.E.I. is then to have Government assistance to expand at Birtley. If new employers considering moving into the area are to be faced with additional transport costs, it will be extremely difficult for me or the Board of Trade to persuade them to come to the area.
I know that some of my right hon. Friends have indicated a degree of irritation that I should have the temerity to get up at this time of night, but I am bothered not about the time, but about looking after the people who sent me here to represent them. I am not sure about What the Government propose to do about tolls on vehicles. All in-

dustrialists and traders in my constituency are faced with possible additional transport costs—I do not say that transport costs will be increased—as a consequence of the policy which the Government are now pursuing.
It is very important, when we invite employers to come into a constituency to provide work—and some have already come in mine, to some extent in consequence of efforts I have made here on the Floor of the House—not to present them with a situation in which their transport costs render them uncompetitive. So I should be failing in my duty if I did not rise to speak on this matter, even though the hour is near to midnight.
On principle I am opposed to levying tolls on bridges. It is a retrograde step. It is the sort of thing I expect from right hon. and hon. Gentlemen on the other side of the Committee, because I think their concept is that we should exploit any situation, and if they think they can get money from anywhere they will get it. But we on this side ought to be a little more forward-looking and progressive in our attitude, and consider that the roads of this country are used by all and sundry. We build the M1 and major motorways, and no one dreams of suggesting that because they cost an enormous amount of money we should impose tolls on the vehicles using them.
We are building, in effect, a road over the Severn. We are doing no more than building a road. If the hon. Gentleman who smiles so sweetly thinks there is anything wrong in that statement I will willingly give way to him.

Sir John Gilmour: I was just amused because, having heard so many of the hon. Gentleman's hon. Friends using this argument which he is repeating, it seems odd to hear his right hon. Friends on the Government Front Bench proposing tolls for this bridge.

Mr. Loughlin: I accept that. I am not going to quarrel with the hon. Member. But it was a sweet smile, and I thought it was directed at me, not my right hon. Friends.

Dame Patricia Hornsby-Smith: Would not the hon. Member agree that, in the main, bridges save many miles of transport round by roads? He is not alone in having tolls—on


bridges going over the top. My constituents use a bridge which goes underneath, through a tunnel and we are paying tolls, and heavily and willingly subscribing, because of the hours saved and the mileage saved by the DartfordPurfleet tunnel.

Mr. Loughlin: That seems, on the surface, a very logical and well-thoughtout argument, but we can build a road which curves round many miles—as we have done in this country—or a road which is comparatively straight. We can have a road from Birmingham to Ross which is a straight road; we can use a road from Birmingham to Worcester, going round the Malverns. It is the same argument. The right hon. Lady ought to recognise that the only purpose in building a motorway is to have a straight, direct road which saves many miles and transport costs. If the right hon. Lady disputes that, perhaps she will say why.

Dame Patricia Hornsby-Smith: It is more expensive to span a river. No doubt I shall be corrected if I am wrong, but I think that it costs about £1 million to build a mile of motorway, whereas it cost about £13 million to build the Dartford to Purfleet tunnel. That tunnel avoids the necessity of travelling 20 or 30 miles up to London and then going down to Kent. Whether one goes over the river, or underneath it, one saves the cost of going round it, and the congestion caused by doing so. It is much more expensive to build a means of crossing a river than it is to build a road, and that is why, against opposition in my own area, I have supported tolls on the Dartford to Purfleet tunnel, and why I accept that it is not unreasonable to impose tolls where heavy expenditure has been incurred to provide a short cut.

Mr. Loughlin: In a rather lengthy intervention the right hon. Lady merely shifted her ground. She first argued that tolls should be imposed on bridges because they provide a direct route from one point to another and thus save transport costs. A similar advantage accrues from building a motorway as opposed to building the old type of road. The right hon. Lady and her hon. Friends have never suggested that tolls should be imposed on motorways.
Finding that her first point was rather a sticky one, the right hon. Lady moved

away from it and said that it cost £1 million to build a mile of motorway—I think that that is a bit of an exaggeration, and that in recent years the costs have been estimated at between £400,000 and £500,000 a mile, but even that is too high, and there should be an investigation into road building costs—but considerably more to span a river.
If it can be argued that because bridges over rivers cost more to build than motorways, there should be tolls on the former, it can equally be argued that as motorways cost so much more to build than ordinary roads, there should be tolls on them, too. The argument goes full circle.
My right hon. Friend ought to think again about imposing tolls on bridges. He ought to accept that such a proposition is outworn and out of date. I know that I would be in difficulties if I had to face the situation which the Government have had to face after 13 years of Tory Governments, but we are not bogged down by internal economic difficulties. We are bogged down by an external financial crisis.
The bankers may suggest that we ought to impose tolls on our bridges, but I very much doubt it. I can see no earthly reason why we should not dispense with tolls, a practice which was initiated by the previous Government, and get down to the job of providing an adequate transport system in all areas for use by both industry and the private individual. Our job is to provide an efficient transport service. If an efficient transport service involves the provision of bridges we should not take a different attitude to bridges from that which we take to motorways.
It is about time that my hon. and learned Friend gave us some indication of the Government's intentions in this respect. I should like to see him take the whole of this provision back and ask the Government to think anew about their attitude to bridges, and forgo any suggestion of imposing tolls.

12 m.

Mr. Geoffrey Wilson: I do not want to follow all the ground covered by the hon. Member for Gloucestershire, West (Mr. Loughlin). He covered rather a wide field. I shall not follow him into the argument about toll bridges, except to say that it is unfair to accuse the


owners in all cases of being profiteers—which seemed to be the substance of his remarks—because in the case I have mentioned the owners have received nothing at all for some years, and they have spent all the tolls they have received in maintaining the bridge—a burden that otherwise would have fallen on the taxpayer or ratepayer.
I am in favour of tolls in respect of bridges like the Severn Bridge, in appropriate cases, because—and this concerns the point raised by my right hon. Friend the Member for Chislehurst (Dame Patricia Hornsby-Smith)—there is also the question of the total expenditure involved in road maintenance. Whatever Government are in power, they must have some target, and if they are going to spend a large proportion of that target on bridges, which are very expensive, there will be less money left to spend on major and minor road improvements. There is bound to be a shortage in this respect, whatever target is chosen.
I am pleased that tolls are proposed for the Severn Bridge, because of the experience that we have had with the Tamar Bridge. For years the Cornwall County Council and the City of Plymouth were agitating for a road bridge across the Tamar. I was partly responsible for the building of the bridge, because I pointed out to the then chairman of the Cornwall County Council that he should not expect the Minister of Transport of any Government to spend a large sum of money in building an expensive high bridge across the Tamar—and it had to be high, because the Royal Navy uses the water underneath—when there is an urgent need for other bridges, particularly bridges such as the Severn Bridge, for which there must be a higher priority, because there are more people in Bristol and South Wales than there are in Plymouth and Saltash.
The Cornwall County Council and the Plymouth County Council then decided to ask for statutory powers to build the bridge themselves, and that bridge was built without any assistance from the Ministry of Transport. It was built under a Private Act as a toll bridge. The cost of building it will be recouped in the course of years. Indeed, the bridge has already proved to be so popular that more money is being made than was

expected, and the bridge will pay for itself much earlier than was expected. If the Severn Bridge can collect money in this way it will not be a burden on the general taxpayers, and it will allow more money to be spent on the motorways and the major and minor road improvements which are so necessary. The more money spent on the roads the better it will be, because we shall in any case have a great problem in building sufficient roads to keep pace with the growing amount of motor traffic.
If, by the imposition of reasonable tolls on the Severn Bridge, there is a little more money available for other urgent purposes, so much the better.

Mr. Tam Dalyell: As the representative for the area at the southern end of the great bridge over the Forth, I want to ask my hon. and learned Friend one or two simple questions. Is it right that a motorway over sea should be taxed, and a motorway over land untaxed? What is the qualitative difference between a major roadwork such as the Severn or the Forth Bridge on the one hand and the M.1 or the Preston by-pass on the M.6 on the other? It is certainly our experience that imposing tolls is not only a questionable way of raising money, but it also brings about some bad physical difficulties.
Before making a final decision on tolls over the Severn, I think that the Minister ought to look at the traffic delays that have been caused Sunday after Sunday and weekday after weekday in the summer, with cars queueing up in order to pay their 2s. 6d.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): May I begin by assuring my hon. Friend the Member for Gloucestershire, West (Mr. Loughlin), that I, for one, will never find it irritating, whatever the hour, to listen to him putting forward so cogently the interests of his constituents? I have great sympathy with the point of view which he was expressing. I assure him—and I hope I can substantiate the assurance with some figures later—that as we envisage the operation of these tolls, it is quite clear that anyone who will be required to pay a toll for the use of this bridge will still be a net gainer as a result of the construction of the bridge, because of the great saving there will be for him on the


present costs he has to incur without the facility of the bridge.
I was invited at the outset by the right hon. Gentleman for Wolverhampton, South-West (Mr. Powell), to give some information to the Committee, in a broad sense, about the way in which the Government envisage the operation of these tolls, and what the policy would be. Obviously, it would not be right for me to go into this matter in any detail. It is a matter which will be dealt with when the Bill itself is considered, a Bill which will have an Explanatory Memorandum to set out the financial provisions.
Perhaps I may first deal with the general principle on why we think it right that tolls should be charged in the case of river crossings, and why we treat them differently from motorways, the point which my hon. Friend the Member for West Lothian (Mr. Dalyell) just raised. First, let me remind the Committee that tolls are charged already on other large river crossings in this country that have been constructed in recent times. I think they have been mentioned already—the Forth Bridge, the Tamar Bridge and the Dartford Tunnel; and recent Acts authorised tolls on the Tay Bridge and the Tyne Tunnel, when completed.
It was, I think, in 1960 that the last Government announced their intention of charging tolls on the Severn Bridge in the same way. We have considered the matter, and propose to make no change in that policy. As was pointed out by the right hon. Lady the Member for Chislehurst (Dame Patricia Hornsby-Smith), the cost of constructing bridges of this kind is exceptionally heavy, and the Severn Bridge itself, like the tunnel to which she referred, will cost over £13 million. There is no doubt that, while the cost of constructing such bridges is exceptionally heavy, they do bring exceptional savings to the users of them—which is the real distinction which can and should be drawn between the position of users of these bridges and that of users of motorways in general.
One can point precisely to the saving and the gain, which each individual using the bridge will achieve as a result of the presence of that bridge, though when someone uses a stretch of motorway, one cannot say what saving, if any, he has achieved. The motorist who uses the

M.1 instead of the A.5 is making a very slight saving, if any, in terms of petrol. One cannot draw a parallel.
I will give a few figures to illustrate the point. People who at present travel by road will save about 45 miles of travel as a result of the construction of this bridge. The journey by road from, for example, Bristol to Cardiff is at present about 90 miles. That will be cut by about 45 miles. The consequent saving in expenditure on petrol at 5s. 3Y1. per gallon for a 30 m.p.g. vehicle would be about 8s. or for a 25 m.p.g. vehicle it would be about 9s. 6d.
The proposed toll rates have not been determined. It would, in the first instance, be a matter for Parliament to determine the provisions of the Bill, but I can say that what is proposed is that the actual rates should be fixed by regulation, subject to the principles being laid down in the Bill. This would enable, if it were necessary, changes and modifications to be made in the rates from time to time. Although they have not been fixed, the sort of toll rates envisaged would certainly be considerably less than the savings in petrol I have illustrated.

Mr. Loughlin: The question of distances is not an easy one to understand. The Severn Bridge will cost £13 million. This will represent a saving of 45 miles in the journey my hon. and learned Friend described. Considering the matter on the basis of mileage, it is obviously cheaper to build the Severn Bridge—based on the figure of £400,000 per mile of motorway—than it would otherwise be to build a motorway. On some future occasion we will have to face the problem of constructing a motorway from Bristol to Cardiff. I am endeavouring to show that the construction of bridges, certainly some bridges, is not such a dear business after all.

Mr. MacDermot: If my hon. Friend's point is that it is a good economic proposition to construct a bridge of this kind, I entirely agree with him. But the question is on whom is it right to impose the burden of the cost of its construction? We think that whereas here there is a clearly defined category of people who derive the benefit and who can, without great administrative cost, be made to pay for it, it is right that they should be the ones to pay, rather than the general taxpayer or ratepayer.
I have given some figures relating to roads. I understand that the figures relating to the ferry are that the present cost of use of the ferry is 7s. 6d., together with Is. for the driver and 1s. for each passenger, up to 15s. for medium-sized vans. As hon. Members will see, comparing that with the savings I mentioned on petrol, the savings on the use of the bridge compared with using the ferry would be at least as large, if not larger than, the saving for a person who is making the road journey.
These are the general reasons why we think it right that the burden of these exceptional costs should fall on the users, but I wish to make it abundantly clear that this decision and recommendation which we are making to the Committee is entirely without prejudice to the question of the financing of motorways. I hope that no hon. Member will think that, because we have come to this conclusion in regard to bridges, we have any intention in our minds of imposing similar charges on motorways.

Mr. Powell: Is the Financial Secretary saying that the principle behind tolls is to recover the capital cost or the capital cost and maintenance? Will he enlarge on this matter?

Mr. MacDermot: I will deal with that briefly. I cannot go into great detail on it at this stage but, in general, the intention is that the tolls should cover amortisation of the capital cost over a period of 30 to 40 years, with interest, and also the maintenance costs of the bridge and the cost of collection.
If I could give some indication of what that might mean in terms of figures, on the latest estimate of the cost of the bridge, which I said was over £13 million, amortisation over a 30-year period at 6 per cent. would involve annual payments of approximately £1 million. In addition, if the revenue from tolls is to cover the cost of collection and maintaining the bridge, the scale of the tolls would have to be fixed at a level which would produce an annual revenue of £1,128,000—something of that order.
I do not want to be tied to these as final figures. I am only giving them in the spirit in which I was invited to do so, as a broad indication.

12.15 a.m.

Mr. Anthony Kershaw: On the figures which the hon. and learned Gentleman has just given, may we have some indication of what the tolls are likely to be? As it must be known approximately what number of vehicles will use the bridge, and as we know what the revenue each year will be, we ought to be able to be told what the tolls will be. We have a long time ahead of us tonight so perhaps the Minister would take the opportunity to tell us, because it is a matter of very particular moment to those who live in Gloucestershire, in my constituency in particular, and who very often have business which takes them to South Wales. At the moment they have to make up their minds whether to go by way of the City of Gloucester, which is a difficult bottleneck, or whether to go down to the ferry, which is an extremely frustrating experience on a summer day. Even if one can eventually get on to the ferry one may have to wait several hours to do so.
Therefore, this bridge is of very particular importance, and in assessing whether it is likely to be an amenity or not my constituents would very much like to know how much they will have to pay. The hon. and learned Gentleman has given us all the figures except the last two, and in the time at my disposal I have not been able to work out what the tolls will be. I might, perhaps, be able to work out what the figure will be were I seated, but I cannot do it on my feet.

Mr. Loughlin: The hon. Gentleman should take his shoes off.

Mr. Kershaw: I do not think that to take my shoes off would help. Perhaps as the hon. Gentleman is in a more comfortable position than I am, and has in his hand a pen with which he has been doodling away in order to keep himself awake, he will calculate the number of vehicles of different sorts which will have to pay a toll in order to produce a net annual revenue of £1,128,000.
I dare say that the vehicles will increase in number each year so we have to allow for a sort of sliding scale. The hon. Gentleman would have to calculate how many vehicles would be able to get over the bridge and then, perhaps, he could make another intervention and tell us the result of his calculations.

Mr. Loughlin: The hon. Gentleman is asking the impossible because there are so many imponderables in the matter. We do not yet know what kind of vehicles they are going to be. We only know that at the present time there are vans, wagons, motor cars and cycles. In the last few years we have had motor cycles, mopeds and various kinds of cycles. I do not know what sort of scientific or technological developments will be made in the next 10 years. There may be vehicles of which we do not dream at present. My hon. and learned Friend might still be a member of the Government then and might decide to bring in amending regulations which would change the calculations completely. He might charge twice as much toll for the new vehicles as for motor cycles. I know that I can do most things, but the hon. Gentleman knows that I cannot do the impossible.

Mr. Kershaw: The hon. Gentleman and I are at a certain disadvantage. The Minister has all the cards in his hand, or has one or two up his sleeve, and it is disappointing that he has not shown us the full extent of them.
I hope that, when rates are considered, a sense of equity will prevail. The hon. and learned Gentleman will not wish to become, in the rather hackneyed cliché, a desiccated calculating machine—something which it is dangerous for anyone on his side to be—and he will have regard to what ordinary people fairly close to the bridge will feel reasonable in wishing to use the bridge not so much for trade or business but for normal amenity purposes.
As regards those who will wish to use the bridge for the purposes of trade, the calculation which the hon. and learned Gentleman gave about saving 8s. on a journey from Bristol by a car doing 30 miles per gallon is interesting, but what about lorries? Users of lorries will save a great deal more not only in £ s. d. but in the vital element of time. As is well known, a great many lorries come up from South Wales during the night in order to bring fresh produce for sale in Covent Garden market, and it is most important that they should be able to come up in good time. The users of these lorries will not only have the immediate financial benefit of the bridge but will have a rather more distant interest

and be willing to pay for the time and trouble saved.
I do not regard tolls in themselves as offensive. They represent a "pay-as-you-use" concept which, I think, is quite agreeable to many hon. Members and which seems in all the circumstances reasonable. I do not believe that transport costs will be increased, as the hon. Member for Gloucestershire, West (Mr. Loughlin) thought, for people living in his constituency or in mine. The inconvenience of having to go round is very great. We have had the welcome assurance that the charges will not be calculated at the full saving. I understand that the cost of the toll will be rather less than the saving which will result, and we in Gloucestershire are very grateful for that assurance.
There will be countervailing advantages not only from the point of view of transport. The value of houses and of land, particularly in the Forest of Dean, a remote and hitherto rather barbarous area—

The Deputy-Chairman: Order. The hon. Gentleman is getting very far from the Severn bridge.

Mr. Loughlin: On a point of order, Sir Samuel. I live in the Forest of Dean. Is it in order for the hon. Gentleman to refer to me as a barbarian?

The Deputy-Chairman: I did not hear the hon. Gentleman so referred to.

Mr. Kershaw: I should not dream of doing so, Sir Samuel. I am entitled to say that communications with the Forest of Dean have in the past been extremely difficult and, therefore, the value of land and property in that area has been much lower than elsewhere. One of the consequences of the building of a motorway is that land near it becomes more expensive. This effect is already to be seen near the site of the Severn bridge—doubtless, the hon. Gentleman will rejoice in it—where land, although the bridge is not yet open, is rising in value in anticipation of the event and the wish of people to come to live there. As it is the policy of the present Government to reduce the price of land, one wonders how the hon. and learned Gentleman feels about that.
There will be the further advantage in that roads which will be relieved of their present traffic will become much more


agreeable than they are now. Those who know it will agree that the A38 as it goes through my constituency and the road from Gloucester—

The Deputy-Chairman: Order. The hon. Gentleman must come back to the Severn Bridge tolls.

Mr. Kershaw: With respect, Sir Samuel, although, of course, I bow to your Ruling, I feel that I am not very far out of order in referring to the effects which the bridge will have on the neighbourhood roads. It is a matter of very real importance, in two ways. At present, the bridge is well under construction but I am not satisfied, nor are the local people, that the approaches which lead to it are in an advanced enough state for them to cope with the increased traffic.
In that case, the Severn Bridge will not be able to be utilised to its full capacity simply because people will not be able to get to it. This, Sir Samuel, is of distinct relevance because the tolls from the new bridge will, consequently, not be so large as is calculated, and the hon. Member for Gloucestershire, West may be entirely out of line in the figures which he claims to have but which he has refused to give to the Committee tonight. I should very much like to know what they are so that I might try to determine whether the feeder roads into the Severn Bridge will be adequate for their new purpose. I should like also to know more about the point raised by the hon. Member for West Lothian (Mr. Dalyell) about the collection of tolls.
In common with other hon. Members, I have travelled on roads, notably in Italy and the United States, where tolls are collected, and I was rather surprised to hear the hon. Member say that on the new Forth Bridge congestion is caused by the collection of tolls. I think he said that the congestion was very great. On the roads abroad where tolls have to be paid, the collection system seems to work without delay. There appears to me to be no congestion at the entrances to motorways or bridges, and we in Gloucestershire would be interested to know what system it is proposed to adopt and whether it is to be the same as that employed on the Forth. If so, it might seem that we are to have inconvenience and delay in getting on to the new bridge.
If the system is throughly faulty—and there are those with some experience who say that there will be difficulties—then perhaps the great boon which the Severn Bridge is supposed to be will not prove to be the case in fact. We may regret having spent £13 million of public money on this bridge when we find we cannot get on to it easily because of inadequate approach roads and because of inadequate entrance arrangements. We may not have the amenities which were expected from the bridge.
I would say finally that if the bridge is properly run, and the approach roads properly built, it will be of great benefit to our county because expenditure on other roads, which at present is very high—and these are roads which are seriously overloaded—will be diminished by a considerable margin. That, at least, will be a great relief to the ratepayers of Gloucestershire and for that reason alone, they will welcome tolls on the Severn Bridge.

12.30 a.m.

Mr. Robert Cooke: I should like to add something to the points raised by my hon. Friend.

Mr. Loughlin: The hon. Member has only just come into the Committee.

Mr. Cooke: The hon. Member for Gloucestershire, West (Mr. Loughlin) is much given to interrupting from a sedentary position. I was not here all the time, but I heard enough to know that he made reference to a point in which I am interested. I have in my constituency the Clifton suspension bridge—an old-fashioned type of bridge of this sort, but from which much can be learned in the matter of levy of tolls.
It seems to me that this whole question of the Severn Bridge and its tolls will not be adequately discussed. In any case, it is a pretty late hour to bring on a discussion on this matter. I hope that the Minister will be able to answer the questions my hon. Friend asked because there have been cases of great road improvements where the whole scheme has not been of sufficient benefit because the question of access has not been properly thought out.

Mr. MacDermot: I suspected that I have already said too much. When I learned that I had tantalised the


hon. Member for Stroud (Mr. Kershaw), I became convinced that I had said too much. This, after all, is a Ways and Means Resolution. I was led by what the hon. Member said to give some figures, but it would be quite wrong to go further into the matters raised by the hon. Member.
I was not sure at one stage whether we were listening to his Second Reading Speech on the Bill or merely a trailer for a speech in Committee. In any event I cannot go further than to give the indication I have given as to the level of tolls which might be imposed if the Committee approves of the Ways and Means Resolution and the House passes the Bill.
All that the Committee is concerned with at the moment is deciding the question of principle of whether by this Resolution we are entitled to the levying of tolls. If the Committee does so decide, all the questions which have been raised will be gone into carefully at a later stage.

Question put and agreed to.

Resolved,

1. That the Minister of Transport (hereinafter referred to as "the Minister") shall be authorised, in accordance with orders to be made by him, to levy tolls in respect of vehicles using the carriageways comprised in those parts of a new road constructed, or in the course of being constructed, by the Minister which cross the Rivers Severn and Wye by bridges or constitute the approaches to such bridges.
2. That it is expedient to provide—

(a) for imposing restrictions and other requirements in respect of vehicles stopping or remaining at rest on the said carriageways, and for securing the removal of such vehicles and the imposition of charges in respect of their removal;
(b) for securing the operation (either by the Minister or by other persons) of a service of removing such vehicles from the said carriageways;
(c) for extending, in relation to the said carriageways, the powers of prohibiting or restricting the use of roads, and, in particular, of regulating the use of special roads, conferred by the enactments relating to road traffic; and
(d) for imposing other prohibitions and restrictions in relation to the parts of the new road which are referred to in paragraph 1 of this Resolution and in relation to structures, works and apparatus on, under or over those parts of that road or connected therewith or with the regulation of traffic thereon or with the levying of tolls as mentioned in that paragraph.


3. That, in any case where by reason of any accident or other emergency vehicles which would otherwise use the said carriageways are authorised to use the cycle track or the footway comprised in those parts of the new road which are referred to in paragraph 1 of this Resolution, the Minister shall be authorised to levy tolls in respect of the use of the said cycle track or the said footway by those vehicles; and, for the purposes of any such case, paragraph 2 of this Resolution shall have effect in relation to the said cycle track or the said footway as it has effect in relation to the said carriageways.
4. That it is expedient to provide for the extinguishment of any franchise to operate a ferry across the River Severn in the vicinity of the said new road and for the payment by the Minister of compensation in respect of any such ferry which is discontinued in consequence of the provision of that road.
5. That tolls levied as mentioned in paragraphs 1 and 3 of this Resolution, and any sums received by the Minister in connection with the removal of vehicles as mentioned in paragraph 2 (or in that paragraph as extended by paragraph. 3) of this Resolution, shall be paid into the Exchequer.
6. That it is expedient to provide for other matters incidental or supplementary to the matters specified in the preceding paragraphs of this Resolution.

Resolution to be reported.

Report to be received this day; Committee to sit again this day.

Orders of the Day — RIVERS (PREVENTION OF POLLUTION) (SCOTLAND) [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to make further provision for maintaining or restoring the cleanliness of the rivers and other inland waters in Scotland, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Secretary of State under that Act and of any increase attributable to the provisions of that Act in the sums so payable under any other enactment.

Resolution agreed to.

Orders of the Day — WELSH GRAND COMMITTEE

Ordered,
That for the remainder of the present Session the following paragraphs shall have effect:

(1) There shall be a Standing Committee to be known as the Welsh Grand Committee to consider such specified matters relating exclusively to Wales and Monmouthshire as may be referred to them and to consist of all Members sitting for constituencies in Wales and Monmouthshire, together with not more than five other Members to be


nominated by the Committee of Selection, who shall have power from time to time to discharge the Members so nominated by them and to appoint others in substitution for those discharged;
(2) A Motion may be made by a Minister of the Crown at the commencement of Public Business, to be decided without amendment or debate. to the effect that a specified matter or matters relating exclusively to Wales and Monmouthshire be referred to the Welsh Grand Committee for their consideration;
(3) If such a Motion be agreed to, the Welsh Grand Committee shall consider the matter or matters to them referred on not more than four days in a Session, and shall report only that they have considered the said matter or matters.—[Mr. Bowden.]

Orders of the Day — SCOTLAND (CADCO PROJECT, GLENROTHES)

Motion made, and Question proposed, That this; House do now Adjourn,—[Mr. Ifor Davies.]

12.34 a.m.

Mr. William Hamilton: A few years ago, from a small butcher's shop in Victoria Street, Hove, Mr. Dennis Lorraine successfully sold sausages. So successfully that in 1960 the Royal Victoria Sausage Company was started by the same gentleman. This enabled Mr. Lorraine to buy an ex-Government Nissen hut at Partridge Green, from which he made a profit of £7,000 in 1961.
Mr. Lorraine appears to have been something of a genius as a salesman, and probably fancied himself as a tycoon. In 1961, he looked around for capital with which to expand his business, and through business connections, Mr. Lorraine was put in contact with Mr. Thomas Roe, an international lawyer who has lived in Lausanne in Switzerland for several years now.
Mr. Roe is a director of more than 30 companies, but he operates mainly from Lausanne. Roe decided to put up some money for the Lorraine expansion, and Mr. George Sanders, the film actor, and his wife Benita, were also persuaded to put up some cash.
Unfortunately, the proposed expansion in Sussex was refused by the planning authorities, and encouragement was given to the firm to expand in a development district, in fact in Glenrothes, in Fife. The name "Cadco" was that

of Mr. Sanders' personal company registered in Curacao in the Dutch West Indies, but operating in Lausanne where Mr. Sanders lives.
By the autumn of 1962, Mr. Thomas Roe had joined Cadco Developments, which had been registered in London. and so, in May, 1963, the project was launched in Glenrothes, in my constituency. It was supported by the Scottish Development Department, by the Scottish Council (Development and Industry), by the Glenrothes Development Corporation, by the Board of Trade, and by the Treasury.
The Scottish Council was clearly impressed by the size of the project and its potentialities, otherwise I do not think that it was involved. Glenrothes Development Corporation was at that time, I think, asked by the Scottish Council whether a credit check had been made on Cadco, and the Corporation assured the Scottish Council that that check had, in fact, been made. That was probably not true, or if it were true, it had not revealed the true facts, as I will try to demonstrate.
That, I think, was the initial error, and the possible explanations of it were, first, that Glenrothes was desperately anxious to get some big project. The failure of the Rothes Colliery is still a very painful memory in that part of my constituency, and, indeed, in Scotland. Secondly, the General Manager of the Development Corporation, Brigadier Doyle, had known Roe in his Army clays, in the 14th Army. There was no personal friendship—Roe was merely known to Doyle as a capable staff officer. But no doubt the other names associated with Cadco appeared to him and to others to be dazzlingly impressive.
To launch the project, Glenrothes Development Corporation needed sanction from the Scottish Development Department and cash from the Treasury. They got both. One million pounds of public money were being committed, yet no one at that point seemed to have probed into the expected profitability of the venture, nor, indeed, into the availability of capital to Cadco, but an extraordinary thing then happened. The Cadco Developments Company had created a whole lot of subsidiary companies, including the Cadco Building Company. Immediately on getting access to Glenrothes and getting permission to go


ahead, Cadco Developments Company suggested that its subsidiary, Cadco Building Co., should do the building of the piggeries, the factories and all the rest of it.
There may not have been anything intrinsically suspicious that that should happen, but there appears to have been no check at this point on either the financial or the technical resources of the Cadco Building Company. In fact, the entire paid-up capital of the company was £2. They had to take two architects from Glenrothes Development Corporation and quantity surveyors from outside, too. In other words, they had no financial status whatever, nor had they the technical resources to carry out the projects which they were contemplating getting. Why was a company of such dubious standing given a contract worth more than £1 million when the paid-up capital was £2?
Having got the contract, the Cadco Building Company obtained an initial loan of £160,000 from the Royal Bank of Scotland, guaranteed by Sanders, Roe and others. At this point there appeared to be no consultation whatever between the bank and the Development Corporation as to the financial standing and strength of Cadco Building Company.
From these relatively small beginnings the empire began to grow and the debts began to mount. Each extension of the project was apparently approved by the Scottish Development Department. Whether the extension did or did not make sense in business terms, there is no evidence to suggest that there was ever any detailed examination of the financial status and soundness of Cadco Developments Limited and the associated companies, such as the Building Company, the Haulage Company, the Live-stock Company, the Refrigeration Company, the Royal Victoria Sausage Company, the Victoria Wholesale Meats Company, Superfine Food Products and Loch Ness Foods.
The overdraft with the Royal Bank of Scotland gradually mounted to £460,000. Mrs. M. M. Elliott then placed with the Royal Bank of Scotland securities to the extent of £200,000 against the overdraft which I have mentioned. Mrs. Elliott is a very wealthy lady, who lives off the Finchley Road.

I have not her telephone number. She has substantial interests in the manufacturing of plastic goods. I understand that her assets are mostly outside the United Kingdom. She is a very great friend of Mr. Dennis Lorraine, the sausage maker. It is anybody's guess as to why Mrs. Elliott invested her money. Apparently she was given personal indemnities by the other directors of Cadco, including Lorraine.
During the last two weeks, Mrs. Elliott has been to Italy to see Lorraine, and she has issued a very curious statement since that visit in which she states that she has been repaid her £200,000 by Mr. Lorraine, who enjoys her confidence. I am sure that he does. In what form did Lorraine repay Mrs. Elliott? On what bank was the cheque drawn? Was she paid in cash? If so, in what currency? Where is the money now? Most important of all, where did Lorraine get the cash? Five years ago he was a small-time sausage butcher in Hove. There is very strong evidence to suggest that the moneys raised for the Cadco project in Glenrothes have been transferred to other associated companies outside that town and also overseas.
I might give an example from the report of the proceedings at a meeting of the creditors of Cadco Building Company on 7th October. They show that £241,000 had gone to Cadco Developments, £100,000 to Victoria Wholesale Meats, £48,000 to Royal Victoria Sausages, £4,000 to Cadco Livestock, £1,000 to Andromeda Films, £31,000 to Superfine Foods and £12,000 to Loch Ness Foods. Enormous sums, in addition to these, have left the country in the form of travellers' cheques and business allowances and the like. This is why the Treasury is now, despite its denial in the House, investigating possible infringements of exchange control. This was reported in the Fifeshire Advertiser on 21st November this year.
In addition, there has been enormously wasteful expenditure in other directions, for instance on the purchase of motor cars. Mr. Lorraine had a Jaguar Mk. X, a Rover 3-litre, an Aston Martin and a fleet of cars in Glenrothes. There was lots of air travel, all first-class, and of staying in first-class hotels, all on unnecessary jaunts. The Treasury, the Board of Trade, the Development Department and the Development Corporation


were supposed to be keeping a check on the wonderful 2,000 jobs in the pipeline—the prospect held out to us.
At least one high official in Glenrothes had an Italian holiday at Cadco's expense and was offered a senior executive job with Cadco Italiano, which was supposed to process fruit and vegetables in Italy. It may be that that is why the money has gone from Glenrothes—to finance the project in Italy. This high official in Glenrothes—and I have been given his name—was in a position of great trust and responsibility. I have no evidence, and I do not think that there is any evidence, that he was corrupted by this holiday or the offer, but it shows—to put it no higher—the kind of naive, unbusinesslike approach which made some contribution to the collapse of this project.
Indeed, one of the characteristics of this whole operation was that anyone connected with Cadco was tainted by various means. Cadco was unceasing in its endeavours to obligate people. Repeated warning signs of the coming crash were ignored or brushed aside. I have given some examples already. I can give one or two others. I understand that in September, 1963, Cadco applied to the Board of Trade Advisory Council for a substantial grant. I was given a figure, but I will not quote it here.
The refusal of the Board of Trade came in August this year. In other words, it took B.O.T.A.C. very nearly a year to reach that decision. Anyone who has had dealings with B.O.T.A.C. knows that it goes thoroughly into the applicant's accounts. It must do. It is the law. B.O.T.A.C. must, therefore, have had access to the financial records of Cadco. Did it not see the warning signs in those accounts? If it did, did it not convey its findings to the Glenrothes Development Corporation, or the Scottish Development Department?
There was another warning sign. In July of this year, £250,000 was due to be repaid to the Royal Bank of Scotland. It was not paid, yet the bank does not appear to have warned either the Scottish Development Department, or the Development Corporation, and nor did either of those bodies appear to have sought information from the bank. I myself heard numerous and ominous

rumblings here in London from hon. Members opposite, southern England Members, Devon Members, as long ago as last February and March. I wrote to the General Manager of Glenrothes Development Corporation on 30th March saying what I had heard.
I quote his reply, dated 1st April:
The reports of which you speak have, of course, been filtering through to us and we had, in fact, two Lobby Correspondents on to us earlier this week for our comments on such reports.
I have been in contact with Roe, the Chairman, to whom I put the situation bluntly, and I am attaching a copy of his reply.
He went on:
I think myself that one of the problems this Group has had to face is that plant for this type of industry is changing almost overnight, and rather like the aircraft industry, before plant is installed it is overtaken by improved patterns, and Cadco have been trying to get in the most up-to-date plant.
It was a plant of a different kind from what he was talking about. He went on:
They were further delayed, of course, by the 'go-slow' in the building trade … the building industry has clamped down on anything more than 10 hours overtime per week …
There were all the excuses in the world about why this project was not going according to plan.
I have the Telex message from Mr. Roe which was attached to that letter and in which he said:
We are prepared to have a press conference in London or Scotland to dispel any rumours. We are as you know in correspondence with the Board of Trade and we are at their request compiling a number of accounts and financial statements regarding the Group.
I do not know whether they were presented at that time. If so, what action was taken about them? Mr. Roe said that it was hoped to get into production by 31st May, but there is no production yet; the group is in liquidation.
In some quarters there was a strong demand to start investigations months ago. Impartial investigations of the project were made and reported to the Development Corporation months ago. The then Government stalled because of the imminence of the General Election. I am not making any criticism of the present Government. The previous Government are to blame for this, as I shall try to show.
The project was played up by the former Secretary of State for Scotland as a glittering and exciting example of the then Government's success in attracting industry to Scotland. I am now accusing all the then Government Departments responsible—the Treasury, the Board of Trade, the Scottish Office, and the Development Corporation of a grave dereliction of their duties.
There is now a liquidator. The Cadco Building Company has collapsed. The liquidator will no doubt adequately investigate the affairs of the building company, but he will not investigate the role of the Government Departments in the affair, nor the rôle of the Development Corporation. I am well aware that the Development Corporation would rather that I kept quiet about this whole affair. Curt letters have passed between myself and the Development Corporation and I have made my objection to the terms of them to my right hon. Friend. It has refused to provide me with documents essential to the performance of what I conceive to be my public duty, and documents which I know exist.
It points to the fact that it has now some wonderful assets: the finest piggeries you ever saw in your life are in Glenrothes—which a lot of people on housing lists would like to live in—and the most modern food processing plant in Europe, standing idle. Glenrothes says, "Fine, they are ours." But they have been got at the expense of the bankruptcy of several small building firms which cannot get their money, including firms in other constituencies than mine, including the constituency of my hon. Friend the Member for Kirkcaldy Burghs (Mr. Gourlay), who provided me with information, and that of the hon. Member for Fife, East (Sir J. Gilmour). Although he has not bankrupt firms, he has got firms which are in very great financial difficulties as a result of this experience. Further, great hardship has been caused to many workers who have been thrown out of a job.
What I am asking my hon. Friend for is a completely independent inquiry—not a Departmental hushing-up inquiry, but a completely impartial, independent one; or the handing over of the entire case to the Crown Office for criminal proceedings. At the best, this has been

a story of unexampled negligence and incompetence; at worst, a tale of fraud and corruption on a gigantic scale.

12.57 a.m.

The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): The whole House is grateful, I am sure, to my hon. Friend the Member for Fife, West (Mr. William Hamilton) for raising this matter tonight. Since he has a Question down for answer by the Chancellor of the Exchequer on 15th December concerning Treasury investigations in Glenrothes, he will not expect me to anticipate the reply. Nor will my hon. Friend, I am sure, expect me to comment on fresh rumours which have appeared in the Press concerning alleged currency offences. I can assure my hon. Friend, however, that I have taken very careful note of all that he has said, and I am sure that the Corporation will do the same. With this in mind I propose to invite the Corporation to discuss the whole history of the project with me. During the course of our analysis I have no doubt we shall look at these past events in sequence and in some detail.
As my hon. Friend said, the Royal Victoria Sausage Company sought Board of Trade permission to expand its factory in Sussex. This was refused, and the company was invited by the Board of Trade to consider a development district. Glenrothes was selected by Royal Victoria Sausage Company and negotiations began between the company, and the Glenrothes New Town Development Corporation. These were superseded in May, 1963, by the parent company of Royal Victoria Sausage which was described to us as Cadco Developments Limited.
Cadco Developments Limited, as my hon. Friend has emphasised, was to purchase three advance factories which were to be adapted and extended to form a major food processing unit. The ultimate cost was to be about £2 million and the employment over 2,000. At the time the project held out every prospect of a substantial move forward for the new town. This was, no doubt, the reason why so many Departments concerned gave endorsement to the idea. The Corporation might well have been open to criticism if it had missed this opportunity of helping to provide such employment.
In addition, to this, there was every evidence that the company was fully committed to carrying through the scheme. The terms negotiated with the company provided for the purchase of the buildings by the company over a period of 20 years at a rate of interest which would bring a profit to the Corporation. These terms were similar to those negotiated for earlier projects with other firms at Glenrothes and other new towns. The Corporation look up bankers' references for the company, and, in the usual way, obtained from the company a form of indemnity under which, if anything happened to prevent the completion of the scheme, the company would pay for work done on its behalf.
The proposal was that building works were to be carried out by the Cadco Building Company, a subsidiary of Cadco Developments Limited, at a cost certified from time to time by an independent quantity surveyor. Sanction was given by the Scottish Development Department on 20th September, 1963. Work went ahead on building and adaptation works for a first phase development to the value. including existing buildings, of about £1 million.
In September, 1964, it became clear that the Cadco Building Company was in financial difficulties and unable to meet the claims of its creditors. It then emerged that the building company had itself loaned money to its parent, Cadco Developments Limited, and to other associated companies, all of which my hon. Friend has mentioned, and following that it seemed that the whole project was accordingly in jeopardy.
Despite these difficulties, it was hoped for some time that the building company would be able to raise sufficient funds to complete the buildings and meet the creditors' claims, but at the beginning of November one of the creditors forced the liquidation of the firm. It is important to make clear that once the Development Corporation had paid the amounts due to the Building Company under its contracts, it had no knowledge of, or influence over, the disposal of these funds by the company to its associates or otherwise.
It is true that recently it has been made public that in August of this year the Board of Trade turned down the company's application for a standard grant

under the Local Employment Act. It may be argued, as my hon. Friend has argued, that the Corporation should not have embarked on expenditure until the outcome of the grant application was known. Prior to this, however, the company had assured the Corporation that it intended to proceed with the scheme whether or not assistance approved by B.O.T.A.C. was given, and this assurance was repeated even after the Board of Trade turned down the company's application for a standard grant under the Local Employment Act.
To return to the original agreement—and I am sorry that I have to rush this—the Development Corporation undertook to provide the buildings to the company's requirements, and the company was itself to be responsible for the installation of special fittings and plant. The contract provided for the first deposit to be paid by the company to the Development Corporation before the end of August this year, and it was open to the Corporation, if the payment was not made within 14 days of the due date, to renounce the arrangement, and any fittings installed by the company became the Glenrothes Development Corporations' property. This, of course, is what happened.
So far as the Corporation's relationship with the Cadco Building Company is concerned, the Corporation's position was fully safeguarded. In the first place, the agreement provided that work done would be paid for on certificates granted by an independent quantity surveyor, and at rates settled by an independent quantity surveyor on the basis of prevailing rates for comparable work in the area. Payments would be made in instalments as the work proceeded, subject to the retention of a proportion of the sums due at each stage.
Once again, bankers' references were taken up, and the Corporation was informed that the bank concerned would make available more than sufficient funds to finance building operations over the period until payments for work done became due. The building company made it clear that it was interested in establishing itself as a major contractor in the area, and, I believe, subsequently tendered for other public contracts.
Cadco Developments required a particularly tight time schedule, and this the Cadco Building Company claimed to be


able to meet. In a case of this kind, where the buildings are to be purchased by the occupier and the reimbursement of the cost is therefore provided for, it is not unusual for a nominated contractor. to be employed.
No money was paid by the Development Corporation to Cadco Developments Limited and, subject to one exception, the only money paid to the Cadco Building Company is the total due under the various certificates granted by the quantity surveyors, less the retention

moneys still held by the Corporation. The exception is a limited sum, to be offset against a payment due for architectural services provided by Cadco Developments Limited—

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at four minutes past One o'clock.